1. Risk management is always the top priority; survival is the premise of profit.
The essence of trading is not 'how much money to make', but 'how not to be eliminated by the market'. Always prioritize risk: the maximum loss for a single trade (including fees) must not exceed 1%-5% of the principal (adjust according to risk tolerance); never take 'fatal risks' (like going all in, no stop-loss) in pursuit of high returns. Remember: the market is never short of opportunities, but once the principal is lost, you can no longer participate.
2. Go with the trend, do not go against it.
'The trend is your friend' is an iron law in the trading world. The medium to long-term trend of the market (upward / downward / sideways) has strong inertia, and operations against the trend (such as bottom-fishing in a clear downward trend or shorting in an upward trend) have a high probability of failure. The core of judging the trend is 'follow rather than predict': confirm the trend direction through indicators like moving averages and high-low point breakthroughs, and only enter when the trend is clear (such as going long in a bullish trend and shorting in a bearish trend), avoiding subjective assumptions of 'top/bottom'.
3. Strictly set stop-loss, refuse to have a 'gambling mentality'
Stop-loss is the only risk that can be 'actively controlled' in trading. You must preset a stop-loss point before entering (e.g., breaking key support levels, losing to a preset ratio), and once triggered, it must be executed unconditionally—do not make excuses to 'wait a little longer' or 'it will bounce back'. Countless cases have proven: a trade without a stop-loss can erase the profits of the past ten trades. The essence of stop-loss is not 'admitting mistakes', but 'exchanging a small cost for the qualification to continue playing'.
4. Plan your trades, trade your plan.
'No plan, no trade'. Before entering the market, you must clarify: 1. Entry logic (why buy/sell?); 2. Stop-loss point (how much to lose before exiting?); 3. Target point (how much profit to take?); 4. Position size (how much capital to invest?). The core of the plan is 'eliminating emotional interference'—when the market trend aligns with the plan, execute strictly; if not, decisively exit to avoid impulsive decisions.
5. Control your position, refuse to 'go all in'
Position size is an amplifier of risk. Even if you are 100% confident in a trade, you should never go all in or take a heavy position (e.g., a single asset position exceeding 30% of the principal). Market black swan events (policy changes, sudden negative news, etc.) can occur at any time, and light positions allow you to retain buffer space in extreme market conditions. Principle: the clearer the trend and the higher the certainty, the more the position can be increased; when the trend is vague and uncertainty is high, the position must be lowered (or even stay out of the market).
6. Do not pursue 'perfect trades', accept 'imperfect profits'.
No one can accurately buy at the lowest point and sell at the highest point. Those trying to catch 'all fluctuations' often miss the exit opportunity due to greed, ultimately 'turning profits into losses'. The correct approach is to set reasonable profit targets (e.g., based on support and resistance levels, risk-reward ratio), and decisively secure profits once the target is reached; if the market exceeds expectations, you may keep part of the position to 'let profits run', but must simultaneously raise the stop-loss (to lock in some profits).
7. Stay away from leverage, or only use it when absolutely controllable.
Leverage is a 'double-edged sword': it can amplify profits but also accelerate losses. For beginners, leverage is almost equivalent to a 'liquidation accelerator'—even if the direction is correct, short-term fluctuations may trigger forced liquidation. If leverage must be used (such as futures or contracts), two conditions must be met: 1. Strong grasp of the trend, and a clear stop-loss point; 2. Leverage should not exceed 5 times (1-2 times is recommended for high-volatility markets like cryptocurrencies), and the position should be reduced to below the usual 1/5.
8. Continuously review and iterate the trading system.
The market is changing, and trading strategies must also iterate. Spend time reviewing daily/weekly: 1. Successful trades: which logic was validated? Can it be replicated? 2. Failed trades: was it due to untimely stop-loss, incorrect trend judgment, or uncontrolled position? 3. Summarize patterns: which signals have a high win rate? In which scenarios is it easy to lose? Through reviewing, transform experiences into 'replicable rules' to gradually improve your trading system (rather than relying on intuition).
9. Manage emotions, refuse 'impulsive trading'.
80% of trading losses stem from emotional control issues: greed (chasing gains, unwilling to take profits), fear (cutting losses at the bottom, afraid to enter the market), revenge mentality (eager to recover losses after losing, increasing position size). Coping methods: 1. Set a 'cooling-off period': after 2-3 consecutive losses, pause trading for more than 1 hour; 2. Reduce trading frequency: most of the time, 'not trading' is more important than 'random trading'; 3. Accept 'small losses and small gains': trading is a long-term game, not pursuing single-instance huge profits but seeking 'accumulating small victories into large victories'.
10. Clarify trading goals, refuse 'overtrading'.
The purpose of trading is to 'achieve financial goals', not 'frequently trade for excitement'. Set clear periodic goals (such as earning 5%-10% monthly), and after achieving the goal, you may reduce your position or take a break; if the goal is not met, reflect on the strategy rather than blindly increase the number of trades. Overtrading (like executing dozens of trades daily) can lead to accumulated fees and decreased decision quality, ultimately 'working for the broker/exchange'. Remember: the core of trading is the balance of 'win rate × profit-loss ratio × frequency'; high frequency is often the root of losses. Summary.
The essence of trading is 'a game of probability and discipline': there is no 100% profit method, but following the above principles can significantly increase 'profit probability'. The core of these principles can be summarized as: 'control risk, follow the trend, execute discipline, and continuously evolve'. Whether you are a beginner or an experienced trader, deviating from these principles will ultimately lead to lessons from the market; adhering to these principles is the way to survive in long-term trading and gradually move toward stable profits.
Opportunities arise, assets double! Follow Brother Li closely, easily make big money.
Continuously pay attention to: CYBER, PROVE
