Contract Trading 'Lifeline' Guide, Remember These to Avoid Pitfalls

If you plan to enter the high-risk 'battlefield' of contract trading, be sure to keep the following key points in mind, as each one is crucial to success!

1. Stay Calm After a Stop Loss: Contract trading involves risking small amounts for larger returns, and losses are common. After a stop loss, some are eager to open orders frantically to recover losses, while others pause rationally. If you frequently stop loss, do not act impulsively; you should immediately stop trading, review your strategy for flaws. Recklessly opening orders will only lead to deeper trouble.

2. Abandon the Desire for Quick Gains: Trading is not a shortcut to overnight wealth. Beginners are prone to emotional reactions when losing, over-leveraging or hastily opening new orders. Remember, maintaining a calm mindset is key; wealth accumulation requires a gradual approach.

3. Follow the Major Market Trend: In a one-sided market, it is a rule to go with the trend. Both beginners and experienced traders can easily trade against the trend, attempting to 'catch the bottom or hit the peak,' resulting in lessons from the market. Understand the market conditions, patiently wait for opportunities, and align with the major trend to profit.

4. Properly Manage the Risk-Reward Ratio: The risk-reward ratio is central to contract profitability. Ensure at least a 2:1 risk-reward ratio when opening orders to ensure that the profit potential covers the risk of loss, avoiding unprofitable trades.

5. Overcome the Impulse to Trade Frequently: Beginners especially need to pay attention! Blindly opening orders due to market fluctuations may seem like many opportunities, but in reality, there are many traps. If you lack advanced skills, control your hands, trade less, and trade wisely; that is the path to survival.

6. Stick to Your Knowledge Boundaries: Only make money within the scope of your understanding. Recklessly entering unfamiliar areas leads to uncontrollable risks. Focus on deepening your knowledge and accumulating experience; investing in familiar areas is more prudent.

7. Eliminate Holding Orders: Holding orders is the 'death curse' of contract trading. Beginners must first learn to stop loss! When the market reverses, stubbornly holding on will only expand losses; timely stop loss is key.

8. Stay Composed When Profiting: Do not become impatient when you see paper profits; overconfidence leads to failure. At this time, you should strictly adhere to trading discipline, operate according to your strategy, and preserve your profit results.