How to allocate positions and control risks?
Many people ask me: 'Bro, how should I allocate positions? How to control risks?'
I tell them: Position allocation and risk control are the foundation of every operation.
As long as you execute according to what I teach, there will be no problems at any time.
1. Position allocation, the simplest rule
Remember, regardless of how much is in your account, the core principle of position allocation is — do not overexpose yourself to risk.
For beginners, do not exceed 30% of your position.
When starting to operate, use a maximum of 30% of your position to trade,
and keep the remaining 70% on standby, waiting to confirm the market trend before gradually increasing your position.
In this way, if the market is unfavorable, your losses will not be too large.
For intermediate traders, the maximum position is 50%.
When the account increases and you have more experience,
you can use a maximum of 50% of your position to operate.
The remaining funds should continue to be kept in reserve to guard against sudden market changes.
Always remember: do not fully allocate your positions, do not take heavy positions, and proceed steadily.
Every trade should consider whether it is worth opening a position, rather than betting casually.
A reasonable position allocation allows you to have the flexibility to adjust even during losses.
2. Risk control, stop-loss is your best friend
No matter how precise your operations are, the market will always fluctuate, and risks are everywhere.
Stop-loss and position control are your two 'protective shields' to prevent liquidation and achieve long-term profitability.
Set stop-losses to protect your principal
Before each operation, set the stop-loss point to prevent losses from expanding infinitely.
If your stop-loss point is triggered, immediately stop-loss and exit, do not hesitate!
Losses can be bearable, but the more you lose, the fewer opportunities you have for review.
Fixed position to prevent a single trade from affecting the overall account
Before each trade, set the maximum loss value,
and once the loss reaches this level, immediately close the position and exit.
This can prevent a single failed trade from destroying your entire account.
Summary:
Position and risk control are the foundation of your success,
as long as you can strictly execute, control your positions, and set stop-losses,
not being swayed by market temptations, success will be waiting for you ahead.
