If you decide to engage in contract trading, be sure to keep the following points in mind:
Understand the risks and remain calm: Contract trading is essentially about betting small amounts for large returns, and losses are a common occurrence. After incurring losses, many people impulsively open positions, while others choose to take a cooling-off period. My advice is: when experiencing frequent losses, pause trading and calmly adjust your strategy.
Avoid the temptation of quick gains: Contract trading is not a shortcut to instant wealth. When faced with losses, maintain a calm mindset and do not rush to open positions, especially avoid over-leveraging.
Follow the trend: The overall trend is key to trading. When the market shows a one-sided trend, you should trade in the direction of the trend, not against it. Trading against the trend often leads to significant losses; whether you are a beginner or an experienced trader, trading against the trend can result in painful lessons.
Maintain a reasonable risk-reward ratio: The risk-reward ratio is fundamental to trading; ensure that the risk-reward ratio is at least 2:1 to trade reasonably and increase your chances of success.
Avoid frequent trading: Frequent trading is a major taboo in contracts. Especially for new traders, it is easy to act impulsively when faced with the market, missing out on good opportunities. Remember, most so-called "opportunities" may lead to losses.
Only trade within your understanding: Keep your trading within your comprehension until you fully understand the market and strategies; avoid overextending.
Do not hold positions blindly: Holding positions in contract trading is a major taboo, especially for beginners. Be sure to set stop-losses, implement them promptly, and avoid letting losses grow by holding positions blindly, which could gradually lead to disaster.
Stay humble during profitable times: Remain calm during profitable times, avoid excessive confidence, and maintain rationality to prevent losses due to overconfidence.
Summary: Contract trading is fraught with risks; calmness, rationality, and following the trend are the keys to success.
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