Playing Contracts?
Although the recent market conditions are favorable for trading, many contract traders are still losing money or frequently facing liquidation.
I advocate focusing on spot trading, and if you want to trade contracts, keep the following key points in mind:
Facing Stop Loss: After a stop loss, there are two types of people: some go on a buying spree, while others enter a period of calm. If you frequently hit stop losses, it's advisable to take a break from trading and adjust your strategy.
Mindset Adjustment: Trading is not a get-rich-quick scheme. Stay calm during losses, avoid rushing to place orders, and definitely don't go all-in.
Follow the Trend: Understanding the major trend is crucial. In a unidirectional market, you should trade in the direction of the trend. Trading against the trend can lead to losses, and whether you're a beginner or an experienced trader, this mistake is easy to make. You need to patiently wait for opportunities to trade.
Control Profit and Loss Ratio: Managing the profit and loss ratio is essential for making money. Aim for profits to exceed losses, and only consider placing orders when the ratio reaches at least 2:1.
Avoid Frequent Trading: Non-expert contract traders should restrain their impulse to place blind orders, especially beginners. Most "opportunities" will actually lead to losses.
Earn Money Within Your Knowledge: Only earn money within your range of understanding.
Do Not Hold Positions: Holding positions in contracts is a major taboo. Beginners must ensure proper stop losses; holding positions can lead to a deep pit, so it must be avoided.
Stay Clear-headed: Don't get carried away when making profits; getting carried away will surely lead to losses.