If you insist on participating in contract trading, keep these principles in mind, as they are crucial for success:
1. Contracts are essentially leveraged bets, and losses are a normal part of the game, but the choices made after a stop loss often determine the subsequent direction. Some rush to make up for losses after a stop loss and open trades recklessly; others take a step back to cool down. It is advisable to pause trading if frequent stop losses occur, and adjust your strategy before proceeding.
2. Trading is never a shortcut to overnight wealth; maintaining a stable mindset is essential during losses. Avoid the urge to blindly open trades to recover losses, especially refrain from heavily investing all at once—such all-in actions often accelerate the risk of a blow-up.
3. Recognizing the overall trend is key. When the market presents a one-sided trend, it is imperative to follow the trend; going against it is the root of losses. Whether you are a novice or an expert, there may be impulses to go against the trend, but once a trend is established, those who go against it often face severe consequences from the market. Learning to wait for the right moment is more important than forcing your entry.
4. Managing the profit-loss ratio is a prerequisite for profitability. Ensure that the profit potential covers the losses as much as possible, reaching at least a 2:1 ratio before considering opening a trade—otherwise, it will be difficult to achieve positive returns in the long run.
5. Frequent trading is a "trap" in contract trading. Unless you are an experienced expert, it is crucial to restrain the impulsive urge to open trades blindly. Novices, in particular, are prone to trying to catch every market fluctuation due to novelty, unaware that most so-called "opportunities" will ultimately lead to losses.
6. Only earn money within your understanding. Even if you make a lucky profit from a market situation that exceeds your comprehension, it is hard to sustain; staying within your competency circle is the prudent path.
7. Absolutely do not hold onto losing positions; this is a red line in contract trading. Novices especially should be diligent about stop losses; holding onto a position may seem like delaying risk, but in reality, it is the beginning of a descent into a deep abyss—constantly remind yourself: holding a position = stepping on a landmine.
8. Do not become complacent when making profits. Once your mindset drifts, your operations are prone to losing control, and losses in such a state often come swiftly and severely.
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