Today, I want to share with you the three major iron rules of contract trading that I have summarized. These lessons were bought with real money.
First Lifeline: Position Control. This is the first dividing line between beginners and veterans! Many people always think, "If I win this time, I will turn my fortunes around," but never consider, "What if I lose?" My method is simple: before opening a position, first determine the stop-loss point, and then adjust the position size until the stop-loss amount feels "neither painful nor itchy". For example, if you can accept a loss of 100 USDT, calculate the position size based on the stop-loss distance. Remember, the size of your position directly determines how long you can survive in this market!
Second Principle: Trading Discipline. This includes three key points:
Stop-loss is the lifeline! Trading without a stop-loss is like driving without a seatbelt; just because nothing happened ten times doesn’t mean the eleventh time won’t be fatal. Those who always say, "I can hold on and recover," have ultimately disappeared into the river of history.
Stay clear-headed. The easiest mistake to make after a loss is to rush to recover, resulting in deeper losses. Remember, each trade is independent; stop-loss is a planned cost.
Don’t be a stubborn bull/bear. The market is always right; any talk of "manipulation by big players" or "good news must go up" is just self-comforting excuses. I have seen too many people stubbornly holding positions, and when they eventually get liquidated, the price did indeed turn around—unfortunately, they are no longer on the bus.
Third Weapon: The Art of Risk-Reward Ratio. The first two points ensure survival, and this point determines profitability. Before I make any trade, I always calculate: potential profit should be at least three times the risk to be worth taking. For example, recently I had a long position with only a 70% technical certainty, but the risk-reward ratio was as high as 1:7. As a result, the profit from this trade was enough for me to lose seven times without harming my capital. Many people do the opposite: they take a 10% profit and run, but stubbornly hold on when they lose, making it difficult to make money even if their judgments are correct. Remember, a high risk-reward ratio is the ultimate weapon for amplifying profits.
