12.6 Only Trade in the Favorable Direction

Our trading insights, everyone should contemplate!

The article below is all practical information, understanding it will benefit you for a lifetime and help you navigate the trading market better.

1. Assume we are bearish at 3730 with a stop loss at 3760. If we haven't reached the critical entry point, then everyone should place a market order with a stop loss, completely replicating 1:1. Stop loss is a norm, there's no need to worry about it, just like eating and drinking water, it's that simple. Since everyone is replicating our trading model, do not attempt to modify it, as our trading model has been perfected through countless validations and trial-and-error. If you can't even replicate it, it will be hard to survive in this market.

2. You can't hold onto losing positions; no matter how many times you bring them back, just one mistake can lead to a collapse. "It's like we are all bearish at 2700, yet the market rose to around 3750. But can the lenders of leverage harvest us? At most, we only lose a few dozen points each time we stop loss, and when we reach the critical high, we hold our short position, and even a slight drop yields profit. As a result, the market rose by 1000 points, and not only did we not incur losses, but we also managed to hold our short position at the current peak trend of 3730." Regarding our current short position, everyone should review it. If it rises to 3900, what can we do? It would only trigger our stop loss at 3760. Our average price is now around 3730, with a stop loss of 30 points, and we can continue to hold short after some consolidation around critical levels, possibly even at a higher point. But if you are a high-leverage trader holding onto losing positions, even 200 points could clear you out, let alone 1000 points.
Note: Of course, the choice of critical levels is very important, and everyone needs to gradually explore through practical experience.

2. Position allocation
Assuming 1000U as the total position, transfer 80% of the U position to the spot account and 20% to the contract account. Each opening cannot exceed 20%, which is equivalent to 200U. If you stop loss, just replenish the U account back to 200U.

3. If you haven’t entered at the critical level we mentioned, then if you enter midway, you need to adjust the original 10x leverage to 3-5x leverage, reducing risks will also reduce potential returns.

4. After making a profit, use compound interest to increase your position. Assuming the total position of 1000U is expanded to 2000U, then each sub-account is 400U.