Should Stop Losses Be Set for Contracts?

First of all, many people think that contracts are a terrible thing, but this part of the people lacks understanding. Existence is reasonable. There are probably two types of people who hold this view:

1. Those who have suffered significant losses in contracts; these people may have lost a lot of money and even blown up several positions, which leads them to believe that contracts are a terrible thing and that playing with contracts will eventually lead to zero.

2. The second type of person is the one who follows the crowd; they have never traded contracts themselves, but see overwhelming opinions online saying, "Those who play with contracts are all gamblers, and they will eventually go to zero..." Thus, they subconsciously believe that contracts are really scary and should not be touched.

I believe that contracts are neutral, just like a knife. If used well, it can lead to quick wealth, but if used poorly, it can easily backfire. For those who trade contracts, the requirements are much higher than for spot trading. So, should stop losses be set when trading contracts?

I think there are two situations: the first is for short-term players, who definitely need to set stop losses. The second is for medium to long-term players, who may not need to set stop losses. Of course, the premise for both situations is to manage positions well. In other words, do not let extreme situations blow up your positions.

For short-term players, the goal is to seek short-term profits. If they do not set stop losses, they can easily let their losses exceed what they can bear, which could lead to permanent exit.

For medium to long-term players, I feel stop losses are not as necessary, of course, this depends on the soundness of your position management and the safety of your positions. Whether the price drops or rises, one can take additional positions. Moreover, there is one very important factor: the direction must be accurate enough; otherwise, this approach may lead to irreversible losses.

In summary, whether to set stop losses or not has no absolute right or wrong; it mainly depends on your trading style and market conditions.

Stop Loss: Suitable for short-term, high-leverage trading, or during high market uncertainty, the purpose is to control risk and protect capital.

No Stop Loss: Suitable for medium to long-term investments, when the trend has not changed or when the position is light, aiming to seize larger opportunities.

Regardless of how you choose, the most important thing is to execute according to the plan and not let emotions influence your decisions. Trading is a marathon, not a gamble; steady and steady progress will allow you to go further.