This morning, when I woke up, I saw friends in the public channel chatting. Some were worried about being lured into a long position, while others were concerned about being lured into a short position. They clearly got into a great position, but due to fear of making a mistake, they got out. Always worried about the previous mistakes and the next potential loss, they were afraid of getting on the wrong bus and then afraid of missing out. As a result, they kept going back and forth, and after a year, not only did they not make any money, but they also lost quite a bit, leaving them exhausted. This issue reflects many people's lack of confidence in trading, possibly due to fear of losses. Of course, this also stems from a lack of technical skills; the fear arises from not having a firm grasp on the situation. However, if you follow what I say, you will almost never lose money and will even make a profit. So, how exactly should you operate?
1. Do not randomly open positions. The principle to always adhere to is to avoid making trades in uncertain positions. Open long positions only at support levels or when there is a strong breakthrough above resistance levels. Open short positions only near resistance levels, or when there is an immediate pullback after breaking through resistance or a drop below key support levels.
2. Stop loss. Stop loss is the most basic aspect of trading. Do not open a position without a stop loss; this is fundamental. You must understand the respect for the market. You need to realize that if you make money ten times and then lose it all on a single position, then where to set the stop loss becomes a key issue. This is also why I have always emphasized opening positions near support and resistance levels. Because when you open a position at these levels, the stop loss can be placed close to them, resulting in very small stop losses. If the price breaks through the resistance level or falls below the support level, it indicates that the position is wrong. A breakthrough of resistance will lead to further increases, while a drop below support will lead to further decreases. Therefore, your stop loss is not based on a ratio but on the direction of the position. The purpose of a stop loss is to tell you that the direction is wrong; you need to stop loss quickly. Additionally, you can use a small loss to gamble for a large profit, resulting in a very high profit-loss ratio.
3. Position management. As for the opening position multiplier, you can adjust it yourself. I will only mention a ratio and position here. The ratio should be opened at 1:2. For example, if the first position is 200, then the additional position should be 400. The additional position must be added near the resistance or support level. Why do this? The purpose of the first position is not to make money but to avoid missing out. The purpose of adding positions is to lower or raise your average price. Even if you ultimately stop loss, the losses will be a bit more on your first position, and since the first position is a small one, you don't need to worry about large losses. Why should additional positions be added near resistance and support levels? Because support levels will have a rebound, and resistance levels will have a pullback. Combining this with your position management ratio, your average price will be very close to the support or resistance level. This means that if your direction is wrong, when it reaches the resistance or support level, it will immediately give you a floating profit, making it easier for you to prepare for closing and reducing positions later.