Not long ago, I helped a friend start with 20,000 yuan and, within three months, he reached 180,000 yuan. At first, he was obsessed with doubling his money every day, which resulted in him blowing his account three times in a week, leading to an emotional breakdown where he wanted to quit.
Later, I advised him to follow the eight iron rules I set—no rush, no all-in bets, and follow the trend. As a result, not only did he recover his losses, but he also steadily multiplied his investment by nine times.
I have guided many friends in contract trading, from initially blowing their accounts daily to eventually being able to make consistent profits, all thanks to the eight iron rules I repeatedly emphasize.
Each rule is an experience gained from pitfalls; missing even one could cost you dearly.
1. Stop trading after consecutive losses
Contracts involve leverage, and losing money is normal, but rushing to recover after a loss is a catalyst for blowing your account. Remember, if you have three or more consecutive losses, stop immediately to review, and only return when both your state and the market are stable.
2. Don’t treat contracts like a casino
Contracts are not a shortcut to getting rich overnight, nor are they a gamble where you go all-in. The outcome of an all-in bet is 90% likely to lead to losing everything. To survive longer, your position must be manageable.
3. Follow the trend
Shorting when the market is rising or trying to catch the bottom during a crash is almost asking for trouble. The trend is your friend; going against it is like clashing head-on with the market, and the results are predictable.
4. Ensure a favorable risk-reward ratio
Before opening a position, calculate the numbers: if the stop loss is 10,000, you should at least have a potential profit of 20,000 to make it worth it. Maintaining a 1:1 risk-reward ratio for long will only make you a laborer helping the exchange make money.
5. Control trading frequency
It’s common for beginners to feel anxious if they don’t make a trade in a day. Forcing a trade without opportunity can eat into your profits due to transaction fees. Learn to wait to seize the most lucrative opportunities.
6. Avoid markets you don’t understand
Suddenly surging altcoins or inexplicable rapid rises and falls should be avoided if you don’t understand them. Money made from luck will eventually need to be paid back.
7. Stop loss is a lifeline
Hoping a losing position will recover is a major taboo in contract trading. Contracts differ from spot trading; a liquidation can happen in an instant. A stop loss is like a seatbelt: uncomfortable but life-saving.
8. Stay calm when in profit
When making money, people are most likely to get inflated with pride, starting to over-leverage, not setting stop losses, and opening random trades. The market excels at teaching lessons to those who are overconfident; the more profitable you are, the more you need to stabilize your mindset.
Trading contracts must be done with spare money; keep this in mind!!!
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