What is position management? It is the technique of deciding how to enter the market in batches and how to stop loss/take profit when you decide to invest in a certain object. It seems simple to say, but in actual operation, it has high requirements for precision and accuracy, because you need to balance risks and returns, reduce risks as much as possible, and seize the only opportunity to make profits. This is a technical job, so most of the traders who can make continuous profits in the market have their own set of position management methods.
So how do we manage our positions well?
If you put too much position into the market at one time, the risk is definitely too high. As for my own position, my principle is that in one transaction, the maximum position used is no more than 50%, which is the bottom line. And I have to further subdivide this 50% position. For example, when entering the market, I usually only use 20% of the position to test the water. If the market develops smoothly and the order is profitable, and adding another 20% of the position can still break even with the cost, then enter the market with another 20% position, and the total position will reach 40%. The remaining 10% of the position can be used as a backup and participate in the attack at any time. The other 50% of the position must not be entered, no matter how good the market is, it cannot be moved, and half of the troops must be left for defense.
The advantage of doing this is that it can ensure your subsequent operations. After all, no matter how confident you are in your ability to judge the market, you cannot avoid the unknown factors in the market. Position stratification can become our moat when facing unknown factors in the market. Even if you make a wrong judgment, you can keep part of the principal to seek a comeback.
It is not the case that the smaller the position, the less risk. You also need to consider the loss margin and the number of losses. It is not the case that the larger the position, the greater the risk. You also need to consider the loss margin and the floating profit margin. In foreign exchange, for technical trading methods, different psychological tolerances, trading modes, and position sizes are also different. If the loss exceeds 20% or 35%, it means that there is a problem with your trading system and you need to stop trading for a period of time to avoid risks. Opening and increasing positions should be within the range allowed by your funds.
The greatest significance of position management is that it provides us with a set of tools to play with risks. When the market is not good and the direction is unclear, we can choose to lighten our position. Even if there are continuous crashes, we can minimize the loss. Conversely, when the market is good, we can choose to heavy position. Only by being able to advance and retreat freely can we maximize profits and minimize risks.
This is also the benefit that position management brings us. After all, we can use this method to adjust ourselves and change our trading system, trading strategy, trading ideas, etc. This is what we need to consider. After all, trading is a very long thing. After all, there are only a few cases of getting rich overnight. Therefore, we still have to do a good job of position management and try to get longer in the trading market. In this way, we can encounter more profit opportunities and have a chance to become a winner in life.
Finally, in addition to doing a good job of position management, we also need to maintain a good mentality. Whether dealing with profits or losses, we must do well and maintain a calm mentality to do a good job of position management. #币安合约锦标赛 $BTC
