1. Contracts are essentially just a tool.
Before I started getting involved in contracts, I heard various different opinions. Some people think contracts are like a monstrous flood, while others believe they are a machine for creating rich people. But in reality, it is just a tool, and the key lies in how to use it. Typically, large funds use it for asset hedging, which is also called risk management, while many people treat it as a way to get rich quickly (I initially had such thoughts too). This is a zero-sum market; if someone profits, someone else must incur a loss. Coupled with the commissions from trading platforms and the possible manipulation by market makers, retail investors are indeed in a difficult position. Saying that contracts are like a meat grinder is not an exaggeration. To survive in this field, one must grasp the survival rules, and only the fittest can survive.
2. It is essential to set a stop-loss when opening a position (please repeat this in your mind three times).
The stop-loss range can be between 1 to 100 points, which should be determined based on the position ratio.
3. The so-called 'method of eternal profit.'
Set the stop-loss at the original price, first use one-tenth of the position for testing. If the trend judgment is correct, continue to increase the position, and then take profits during pullbacks. It sounds beautiful, but reality is very harsh. First, judging the trend is extremely difficult; the market mainly moves in a volatile manner, and opportunities to catch strong trends are very few. Secondly, even if the judgment is correct, continuing to increase the position will elevate the original opening price. Once a small pullback occurs, it may trigger the original price stop-loss, and the transaction fees from frequent operations can be astonishingly high. While doing it right once may multiply the capital several times or even hundreds or thousands of times, doing this in the long run will only end up working for the trading platform, with no sustainability unless you earn a profit and leave immediately.
4. Beginners often do not like to set stop-losses.
I have also gone through this stage. Once the emotion of loss aversion is amplified, it can make people trade wildly, thereby infinitely increasing the risk. Once the capital chain is broken, you can only watch helplessly as you are liquidated. Many times, before you even realize it, you have already been liquidated. Initially, you only wanted to earn one-tenth of the profit, but ended up losing all the capital.
5. There are methods to earn continuously in contracts, but they are certainly not something that beginners can master right away.
Many people participate in contract trading to make a lot of money with a small amount of capital. There are only two ways to make big money: one is to win with position size, which means leveraging; the other is to win with amplitude, such as in large drops like 312 or 519, or in significant rises like from 10,000 to 60,000. To seize such amplitude trends, any analysis may be useless; there is only one method: do not take profits. The most sophisticated profit-taking method is not to take profits, but this is extremely counterintuitive. Out of 100 times, even 90 times may lead to losses or break-even, and I cannot do it either. If the position is small, even a large amplitude will not yield big profits; if the position is large, a small amplitude is useless and also increases the risk of liquidation. All those who make big profits are experts at balancing position size and amplitude.
6. The market is unpredictable, just like soldiers have no constant formations and water has no constant shapes.
The market always develops in the direction of least resistance. Betting on trends and guessing sizes are essentially no different; no matter how much technical analysis you learn, it may still be useless. Being able to read candlesticks and some basic things is basically enough. Technical analysis is actually not difficult; just remember this: if the trend is upward, it will continue to rise; if the trend is downward, it will continue to fall; if it rises a lot but pulls back little, it will rise even higher; if it falls a lot but only rebounds slightly, it will continue to fall. The larger the cycle, the more effective this rule is. Once you understand this, you grasp the core principles of technical analysis.
7. The real way to make big money is definitely through trends.
In a trend, conduct rolling operations; in a volatile market, it is fine to operate with a small position back and forth, but if this trading habit is formed, there will be little hope of getting rich in this lifetime. Short-term trading may yield quick profits, but losses can also come quickly, and over time, the earnings may not even cover the transaction fees. If you think you are the chosen one, then give it a try, but be aware that losing money often starts with winning.
8. Timing of entry is very important; many operations leading to losses are caused by the fear of missing out.
When there is no position, during a downtrend, wait for a rebound to open a short position, and remember not to chase the fall; the same goes for an uptrend, wait for a pullback before entering, do not chase the rise. Doing so may cause you to miss some strong trending markets, but most of the time it will be safer. However, many people only see profits and fail to recognize risks, ultimately blaming others for missing opportunities.
9. Do not be afraid.
Many people have suffered losses in the futures market and no longer dare to open positions. When they trade again, they become hesitant and indecisive. Losses lead to an overly strong purpose in actions, an excessive desire for results, always thinking about making a profit, wanting to avoid losses, and trying to do everything right. This mindset is impossible to lead to profits. The ancients said, 'Do not rejoice in gains, nor mourn over losses.' In trading, this can be understood as: do not rejoice in profits nor lament losses. When your heart is calm enough, you will achieve something. Approach trading with the enthusiasm and passion of your first day in futures; do not be afraid of wolves in front or tigers behind. If you are wrong, stop loss; if you are right, hold on. Do not rush to exit before the trend reverses; otherwise, you will only end up missing out.
10. Enthusiasm.
No matter what you have experienced, maintain enthusiasm and passion, holding on to a beautiful longing for life. Approach your work with the same fighting spirit as your first job, and love boldly like your first romance. Many things in life are like this; whether in career or relationships, there may not necessarily be results, and it is highly likely that there will be none. But if you do not put in the effort or the work, there will definitely be no results. Just focus on doing what you need to do, and do not worry excessively about the outcome.
11. Many people think about opening positions every moment, even operating at full capacity. For them, being in a flat position is worse than losing money.
In fact, the time for trending markets is often very short; controlling drawdowns is the most important thing. How to control drawdowns? Being in a flat position and resting is the best method. Do not always think about capturing every segment of the market; catching one or two opportunities in a year is enough. Missing out is very normal, and there is no need to regret. As long as you are still in this market and live long enough, there will be plenty of opportunities in the future. Time is the only code for retail investors; maintain a calm mindset, wait patiently, and earning money is just a byproduct; enjoying life is fundamental.
12. The principles and insights of trading.
In trading, the more important thing is the mindset; knowledge is like techniques, while the mindset is the internal strength. Just like how Qiao Feng can defeat several Shaolin monks using the Taizu Changquan because he has profound internal strength. Being able to read accurately is not very useful; what matters is what to do after seeing correctly, and what to do after seeing incorrectly. How to maintain composure in holding positions, how to have a good mindset, how to not fear missing out, how to not fear drawdowns... If you always hold a mindset of wanting to win and fearing to lose, it is very difficult to make money in this market. Some things newcomers may not understand immediately, but as long as you spend enough time in this market, you will realize that these are all truths.
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