1. Avoid full position trading
How should funds be allocated? Fund allocation should be understood from two levels: first, from the risk perspective, clarify how much loss we can or are prepared to endure on our current account. This is the basis for our fund allocation thinking. Once this total amount is determined, consider how many times we can afford to lose to the market if we continuously fail. Personally, I believe the most risky method should also be divided into three parts. That is, you should at least give yourself three chances. For example, if the total account capital is 200,000, and the maximum allowable loss is 20% or 40,000, then I suggest the most risky loss scheme is: first time 10,000, second time 10,000, third time 20,000. I believe this kind of loss scheme has certain rationality. Because if you get it right once out of three times, you can profit or continue to survive in the market. Not being kicked out by the market itself is a success, and there is a chance to win. 2. Grasp the overall market trend.
Trends are much harder to trade than fluctuations because trading trends involves chasing highs and cutting losses, requiring steadfastness in holding positions, while buying low and selling high is very human nature.
In trading, the more it aligns with human nature, the less money you make; it is precisely because it is difficult to trade that it becomes profitable. 3. Set profit-taking and stop-loss targets.
Setting profit-taking and stop-loss can be said to be the key to whether one can be profitable. In several trades, we need to ensure that total profit is greater than total loss. Achieving this is not difficult; just do the following: ① Each stop-loss ≤ 5% of total funds;
② Each profit > 5% of total funds;
③ Total trading win rate > 50%
Meeting the above requirements (profit-loss ratio greater than 1 and win rate greater than 50%) can lead to profitability. Of course, high profit-loss ratios with low win rates or low profit-loss ratios with high win rates are also possible. Anyway, as long as the total profit is positive, it’s fine. Total profit = initial capital x (average profit x win rate - average loss x loss rate).
4. Remember not to trade too frequently
Since BTC perpetual contracts trade 24 hours non-stop, many beginners trade every day, and in a month with 22 trading days, they might trade almost every day. As the saying goes: those who walk by the river often get their shoes wet. The more you trade, the more likely you are to make mistakes; after making mistakes, your mindset can deteriorate, leading to impulsive decisions and 'revenge' trading: possibly going against the trend or over-leveraging. This can lead to a series of mistakes, easily resulting in huge losses that may take years to recover.
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