Contract Trading Pitfall Guide: Don't Believe the 70% Win Rate Myth, These 3 Core Elements are Key!
In the contract trading circle, there are always those who tout '70%+ win rates for guaranteed profits.' But the harsh truth is: solely pursuing a high win rate is meaningless! What truly determines profit and loss are these three core elements – profit-loss ratio, trading win rate, and trading frequency. The three are like the fulcrum of a balance; you must understand the trade-offs, as having all three is a fatal logical trap!
1. Why are 'all three cannot be had'?
① High-Frequency Trading: Suitable for capturing short-term fluctuations, relying on win rate to accumulate profits, but with a short holding period, it is difficult to capture major market movements, inevitably sacrificing profit-loss ratio;
② High Profit-Loss Ratio Strategy: Requires patiently waiting for opportunities at critical points (such as major cycle tops/bottoms), trading infrequently with extremely high accuracy demands on win rate;
③ High Win Rate + High Frequency: Seems stable, but can easily fall into frequent small trades, and once faced with a significant single loss, previous profits can vanish instantly.
2. Two Feasible Trading Strategies
1) High-Frequency Trading × High Win Rate
① Approach: Focus on short-period candlesticks, quickly capture small fluctuations, and accumulate profits through a large number of correct trades.
② Suitable Audience: Traders with plenty of time and quick reactions, but must be wary of 'slippage' and transaction fees eating into profits.
2) High Profit-Loss Ratio × High Win Rate
① Approach: Use weekly and monthly charts as references, wait for trend reversal signals, heavily position at critical points, aiming for 'small losses and big gains.'
② Essential Skills: Strong self-discipline (resist the temptation to stay in cash), and accurate trend judgment ability.
3. Core to Survival: Avoid 'Big Losses'!
① Negative EV Value Decisions: Refers to trading habits that lead to losses over the long term (such as holding against the trend, frequent stop-losses).
② Lifesaving Rule: Allow for small profits, small losses, and big profits, but must strictly control the frequency of 'big losses'! Before each trade, ask yourself: Is the stop-loss for this trade within my risk tolerance?
If you want to survive in the contract market, don’t be superstitious; use scientific strategy combinations and discipline to overcome human weaknesses!
