1. Clarify risk-reward ratios, rather than blindly pursuing high returns
Beginner's Misconceptions:
"As long as the rate of return is high enough, a small loss doesn't matter" (Wrong!)
Strategic Player:
Set a risk-reward ratio of 1:3 or even higher for each trade, ensuring that even with a win rate of only 30%, positive returns can be maintained.
Practical Example:
A senior trader always insists on a minimum 1:4 return ratio, trading 50 times in six months with a net win rate of 28%, accumulating over 60% profit.
2. Automated stop loss + take profit, eliminating human interference
Beginner's Misconceptions:
"First, monitor manually; close positions when it feels right" (Emotions disrupt).
Strategic Player:
All orders should have stop-loss and take-profit instructions set simultaneously, fully automated, avoiding last-minute changes caused by fear and greed.
Real Case:
During the series of crashes in March, a trading team used robots for executing take profit and stop loss, maintaining 80% of their assets intact.
3. Layered position increases and decreases to steadily amplify profits
Amateur Practices:
"When the market is good, go all-in at once; if I miss the rebound, chase high"
Strategic Approach:
Initial position controlled within 3%.
Every time a 5% profit is accumulated, use 30% of the profit to increase the position.
If a 2% drawdown occurs, immediately reduce the position by 50%.
4. Core formula for capital management
Maximum opening position = (Total capital × Maximum risk percentage per trade) ÷ (Single stop-loss range × Leverage multiple)
→ Maximum opening position = (200,000 × 1%) ÷ (2% × 10) = 1,000 yuan
5. Dynamic position adjustments to flexibly respond to the market
Beginner's Misconceptions:
"Once positions are opened, they remain fixed"
Strategic Player:
Adjust leverage and positions in real-time based on volatility and floating profits:
When volatility increases, reduce total positions to within 2%.
When the volatility of the CSI 300 is below 1%, appropriate position increases to 5%.
6. Risk hedging, building multiple defenses.
Amateur Practices:
"Heavy positions for a single bet; once it reverses, lose everything"
Strategic Approach:
In core long positions, use 0.3% of funds for options or inverse ETFs for hedging.
In volatile markets, use volatility swaps (VIX) to distribute tail risks.
Real Effect:
During April, a player used 1.5% for hedging, reducing floating losses caused by a steep decline by 60%.
7. Unravel the fears of retail investors, break the trading cycle.
Countermeasures:
Develop a rigorous trading plan, record it in a 'trading journal', review daily, leaving no room for luck.
8. Data-driven decision making, abandoning intuitive operations
Beginner's Intuition:
"Look at K-line patterns and enter or exit based on feelings"
Strategic Player:
Backtest strategies using Python or TradingView scripts.
Statistics on win rates, profit-loss ratios, maximum drawdowns, etc.
Update parameters monthly to ensure the strategy's sustained effectiveness.
9. Continuous review and evolution to maintain long-term competitiveness
Amateur Thinking:
"Stop once I make money, disperse once I lose everything"
Strategic Player:
Review trades weekly, recording key successes and mistakes.
Establish a quantifiable 'trading scorecard'.
Continuously optimize entry, exit, position, hedging, and other aspects.