Let’s talk about it in two parts
1. First, let’s talk about adding positions
Principles for adding positions: Add positions after making profits
Our purpose in coming to the leverage market is to make money! Of course, it is best to make a lot of money, which requires making as much money as possible when we are in a favorable position. Because we are not always in a favorable position, and we often stop losses, we can only achieve the goal of making big money by making as much money as possible when the situation is favorable to us. So what is a good position and what can you do to make as much money as possible?
My understanding is that once your position leaves the cost zone and makes a certain profit, you can be said to be in a favorable position. The description of a certain range of profits is not accurate, mainly because the range is different depending on the type of operation. The specific range is mainly related to the volatility of the variety. We talked about the volatility in the previous part. Generally speaking, When the profit margin of our position exceeds the volatility of this product, it is considered a certain favorable position. For example, assuming that the volatility of thread is 3% and the current price of thread is 4,000 yuan/ton, then your position profit of more than 120 points is considered a favorable position. Of course, I am talking about the daily-level operating cycle. The operating cycles are different and can be adjusted according to the actual situation.
Once the position of adding a position is determined, the next step is to determine the extent of the increase. So how to determine this extent? My answer is that it varies from person to person, but you should also follow some basic rules. My approach is: in principle, the increase in position should not exceed the existing position. That is to say, assuming that your position is 20% at the beginning, when you are in Now that you are in a favorable position, it is best not to increase your position by more than 20%, because if you increase your position by too much, it will have a great impact on your overall cost. Suppose you increase your position by 20%, your profit points will be immediately reduced by half. Can you resist? The ability to retrace can also be retraced by half immediately. In view of this, two things are very important before and after you add a position. The first thing is that the above mentioned how to be in a favorable position, but it does not mean that you are in a favorable position. Once you are in a favorable position, you should add positions as soon as possible. Generally speaking, you have to wait for the market to have a certain degree of retracement, and the price has stabilized, and there has been a relatively obvious small low before adding positions. The second thing is that once you complete the position increase, you must reset the original stop loss as soon as possible. The minimum standard is that this operation does not lose money, which is the maximum limit! My approach is usually to set the stop loss to the small low position mentioned in the first thing. As for whether the stop loss only closes the part of the added position or all positions, this is based on personal judgment and there are no special requirements. However, What should be emphasized is that no matter what, the worst-case scenario is that this operation does not lose money, does not lose money, does not lose money!