Recently, the market has been bleak, with no trends, no fluctuations, and frequent losses, many people have expressed significant losses.

It is clear that we have entered a range of corrective waves, and during this adjustment, the market is strange. It is better to take this time to improve ourselves and learn something beyond trading.

Today, I want to share some insights on position management:

The three most important aspects of position management are:

① Clear stop-loss

② Reasonable risk-reward ratio

③ Minimal capital drawdown

In response to these three points, we can achieve the following:

① Find suitable trading opportunities through the corresponding trading system, and accordingly, we will also identify the corresponding take-profit and stop-loss levels, and strictly execute them.

Remember! Once the stop-loss and take-profit are set, do not change them lightly. If changes occur, it must be due to changes in the market plan, not changes in one's mindset.

② The risk-reward ratio is a trading concept. It refers to obtaining greater profits within acceptable and controllable risks. Since beginners often have biases in their probability judgments (excluding quantitative analysis), we do not consider the influence of probability. Therefore, for each trade, you should aim for a risk-reward ratio of at least 2; over a long period, your returns will be positive.

③ Many people know that if they lose 5%, they need to earn 5.263% to break even. If they lose 10%, they need 11.11%, and if they lose 90%, they need 1000% to break even!

Therefore, we need to set a maximum loss for each trade to help sustain long-term trading; otherwise, it may lead to continuous losses with no hope of recovery. For this reason, I recommend beginners try to keep a reference of 5%, controlling individual losses within 5%, while focusing more on medium-term trades with high risk-reward ratios.

Finally, I want to emphasize one last point: Unity of knowledge and action

Otherwise, no matter what genius ideas or treasures you learn, if you do not apply them in actual trading, it will all be in vain.