Money management (top priority)
Fund management + trading rules = trading system,
Fund management is the skeleton, and trading rules are the flesh and blood.
First build the skeleton, then add flesh and blood, and it becomes a trading system.
There is a saying that the secret of Chinese medicine lies in quantity, and the secret of trading lies in position. Position management is the top priority in trading.
With position management, combined with understandable trading rules, you can ensure that you will not lose a lot of money from the beginning, and may even make money.
Fund management is something you need to understand from the beginning. You can slowly experience some of the subsequent high-winning trading rules.
With experience, you will know after a long time, and you will summarize in your mind what kind of K-line pattern has a higher chance of winning.
Then add this trading rule to your trading system.
The steps of opening an order include trial position and increasing position. If you are wrong after trial position, stop loss; if you are right after trial position, increase position or
Don't add, hold and wait for the right time to close the position.
If you are doing futures contracts, set the leverage to 10 times and use the position-by-position mode (emphasis added, position-by-position mode ensures that you will not forget to stop trading.
In the case of loss, even in extreme market conditions, only the margin will be blown up, and the remaining principal will not be hurt.
10% margin. For example, if you have 2 BTC in your account, you only take 10% of the funds at a time, which is 0.2
BTC is used as margin to open an order, which actually means a 200% position at this time;
This 10% is not fixed. If you don’t have a stable profit, you must not exceed 10%. Wait until you grow up.
Enlarge the base warehouse.
Fund management, five principles:
1. After opening an order, you must set a stop loss. You must set a stop loss. You must develop a habit of setting a stop loss when opening an order.
Don’t think you are hedging or have any fluke mentality. If you are still trapped or your position is still liquidated, you must be unqualified.
of.
2. The stop loss amount for each trial order shall not exceed 5% of the total amount (depending on your own risk tolerance.
I suggest you set it below 5% at the beginning. If you can make stable profits, you can set it according to your own risk.)
For example: suppose you have 50,000 yuan to buy and plan to stop loss at 48,000 yuan, 50,000-48,000 yuan = 2000/50,000 yuan = 2.5%.
The loss of the trial position cannot exceed 5%, so you can only use a maximum of 20% of the funds as a margin to open an order.
Note: The position calculation formula is shown in the following table
3. When you make a mistake in your trial position, you must stop loss. Don’t try to increase your position and then think that you can get away with it. Most of the market
The market is always volatile. It is true that most of the time you can break even by adding positions, but as soon as the trend comes,
You are done for (no floating loss covering position)
3. Strictly stop loss. If the total capital loss is 30%, you must immediately close the position and exit unconditionally.
Don't think about adding positions against the trend to recover your capital first;
4. If you forget to stop loss, you must close the position immediately after discovering it. Never wait for a rebound or callback before closing the position or think about
Add more positions to even out losses. Almost all big guys fail in this regard. You can survive 10 times, but if you fail once,
Come here, the previous 9 times are reset to zero.
5. Initially, it is recommended to increase the position in a 1:1:1 or 1:2:1 manner. For example, if you open a 5% position at the beginning, 1:1 means adding another 5%.
To summarize: when opening an order, you should choose the method of trial position + increase position.
For example, if you have 50,000 yuan and want to go long, you can open a 10% or 20% position first. In fact, this is already a heavy position.
With 20% margin, the initial position is already 300%. It is recommended that you choose 10% margin to open an order at the beginning;
The market goes up, which is in line with your expectations. You open a position and add more positions. If you are wrong and stop loss, you will only lose money once.
Just 5%.
Why do many people lose everything after making a mistake once? If you open an order with a full position leverage of 5x, 10x, or 20x, you will lose everything after making a mistake once.
Even if you are right, you will be wrong next time, and the next time, and it will be meaningless no matter how many times you were right before.
After reading this article, have you discovered the problems in your previous trading orders? Now you understand why you always lose money.