Why Newbies Are So Prone to Liquidation
• Amplified Risk from Leverage: Contract trading often uses leverage, such as 10x leverage, where a 10% price fluctuation could wipe out the principal. Newbies lack an intuitive understanding of the risk amplification effect of leverage.
• Over-leveraged Positions: Many newbies want to profit quickly and invest most of their funds. Once the market moves against them, insufficient margin can trigger liquidation.
• Lack of Risk Awareness: They do not understand the market's uncertainties and do not have a stop-loss plan in place, making it difficult to control losses during extreme market conditions.
Methods for Position Management
• Control Total Position: Do not invest more than 10% of the principal in each trade. For example, with a principal of 10,000 yuan, keep the opening position under 1,000 yuan to reduce the impact of a single loss on overall capital.
• Use Leverage Wisely: Newbies should choose low leverage, such as below 5x, to avoid amplified risks from high leverage.
• Build Positions in Batches: Avoid going all-in at once; instead, build positions in 2 - 3 batches and adjust based on market changes to lower the cost of building positions.
• Set Stop-Losses: Establish stop-loss points when opening a position, typically set at a loss of 5% - 10% of the principal. Close the position promptly when the stop-loss point is reached to prevent further losses.
This article provides a simple introduction to position management methods for beginners. It is not advisable to blindly chase trends and sell on dips; investing carries risks, and decisions should be made cautiously!