When playing contracts, position management is very important. Here are some key considerations:
1. Do not operate with a full position: always keep a certain proportion of reserve funds. When the market is unstable, if the price falls, it will cause a passive situation where buying and selling are difficult, and it may affect the mentality of investors.
2. Buy and sell in batches: reduce risk, dilute costs, and maximize profits. Batch operations can be completed within a day or over a period of time. Because the market is unpredictable, no one can accurately predict short-term price fluctuations, so you must set aside enough funds to cope with unpredictable fluctuations.
• Equal distribution: Also known as rectangular trading method, it refers to dividing funds into several equal parts and buying or selling sequentially, with each buying or selling proportion being the same.
• Unequal distribution: Refers to buying or selling funds in different proportions, such as 1:3:5, 1:2:3:4, 3:2:3, etc. The shapes formed by the proportions include diamond, rectangle, hourglass, etc., with the pyramid trading method being commonly used.
3. Adjust positions based on market conditions:
• When the market is weak, maintain a light position; during a bear market, it's best not to exceed half a position. In a strong market, a heavier position can be taken, and in a bull market, it is recommended that the maximum position be 80%, with the remaining 20% reserved for short-term or emergency funds to respond to unexpected events.
• As market conditions change, corresponding position adjustments should be made, appropriately increasing or decreasing positions. For example, when the trend is clearly downward, positions should be reduced; when the trend begins to stabilize and rise, positions should be increased.
• During market downturns, one can temporarily hold cash and wait for opportunities to arise.
4. Set reasonable stop-loss and take-profit points: Although many investors choose not to set stop-loss points in a bull market, reasonable stop-loss and take-profit strategies remain key to protecting investments. Once the preset stop-loss or take-profit point is reached, it should be executed decisively to avoid emotional decision-making.
5. Do not trade frequently: Once the trading cycle is determined, consistency in the operation cycle must be achieved. For example, when trading long-term, do not engage in frequent short-term buying and selling. While pursuing a long-term trend, intermediate adjustments and fluctuations are acceptable.
6. Stay calm and rational: Regardless of market fluctuations, investors should remain calm and rational, avoiding blind following or excessive trading. Position management should be based on rational analysis and judgment, rather than emotional decision-making.
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