The core of contract to avoid big losses

币咖酋 · 2023-07-05T07:31:22.000Z

The core of contracts to avoid big losses Trading has never been simple. As a contract trader, what kind of transactions cause you the most pain. It is painful to miss a trading opportunity that jumps into the trend, but nothing is more painful than a potentially profitable order ending up with a huge loss. Do you often encounter this problem? You made a profit when you opened a position, but the price immediately moved in the opposite direction. You were reluctant to leave with a small loss. Finally, you left the market with a big loss or the position was liquidated and you had to leave. As a result, the profit became Loss. Fantasy and hesitation are the biggest enemies of traders in the process of holding positions, and they will make you forget about discipline. You will be reluctant to stop losses when you are losing, and you will be reluctant to stop profits when you are making profits. If you are lucky and get out of the market smoothly, you can wash your hands in the future. Otherwise, you will return all your profits and principal to the market, and you will be heavily in debt. The most direct and fundamental reason for this consequence is the lack of a trading plan. Trading master Livermore described the trading plan this way: "Plan your trade, trade your plan." What exactly is a trading plan? The plan is made before trading. Once you enter the market, you must trade according to the plan, and no other factors can affect you. A trading plan takes your emotions out of the trading process, so it must be highly specific, yet easy to follow. Just three sentences to summarize. What do you want to buy, how do you plan to buy it, and what do you do after you buy it. "If the temple before fighting is considered the winner, it should be counted as more; if there is no battle but temple as the winner, it should be counted as less. If more counts as victory, less as less as defeat, what better to count as nothing?" This sentence comes from "The Art of War· by Sun Tzu" "Plan of Planning" tells the story that the ancients had made careful calculations before the battle began, and fully assessed the favorable and unfavorable conditions. After the war began, they would often win; but before the battle began, they failed to make careful calculations. "Temple calculation" rarely analyzes the favorable and unfavorable conditions. After the war starts, it will often fail. What's more, there is no "temple calculation" before the war starts? We all like to compare trading to a battlefield without smoke. Trading is the same as marching to war. The ancients said, "Plan and then act." Everything needs to be planned and prepared before taking action. The same goes for futures trading. No matter what period or variety you place, you must make a trading plan for each order. This trading plan is about how much you will lose, not how much you will win.The most important thing in trading is to try to preserve your principal so that you can live well in this market. Everything in life requires planning. Just like farmers prepare their spring plowing plan every spring. For example, what crops are to be planted in the first crop (choosing varieties for opening a position), when can the ground be plowed (determining the timing of entry), when to sow seeds (preparation for opening a position), how often to weed (fund management), and what to do if there is a disaster ( response) and so on. So the same goes for when we formulate a trading plan. Anyone who knows how to trade knows how important planning is to trading. The process of formulating a trading plan is the process of carefully analyzing and studying the market. If you want to understand market signals, you must insist on talking to the market every day. The way to talk to the market is: make a plan, see the results, summarize, and stick to it. How to make a good trading plan? First, start with the index every day during the review, take a look at the overall situation, and look at the current overall market situation, which also includes the external market situation. Then start reviewing each product to see if there are any actionable opportunities and what the current market situation is like. Specifically, I will look for which product is strong and which is weak. What is my reason for choosing this product? Which product is more in line with my trading model? Should I choose one or all related products? Second, the next step is to find the entry point. If this position jumps short tomorrow, should I place an order? If it meets expectations, at which position will I enter the market? After entering the market, if it goes in the direction I expected, at which position will I exit? If the trade does not go as expected after entering the market, where will I stop the loss? If it has a volatile trend after entering the market, what should I do? Third, what is the probability of success of the selected variety, what is the stop loss ratio prepared, and if the position is successfully opened, should I do it intraday or daily. What is the position configuration. Fourth, what is the price range at which I open the position, at what point do I plan to close the position at a profit, and is the expected risk-to-reward ratio worthwhile? Fifth, if I encounter a sudden black swan event after opening a position, how should I deal with the order in my hand. The above items basically cover the steps of a trading plan. As long as we do these preparations before the market, we don't need to be affected by the news during the market. We only need to wait quietly for our market to enter.As for the unplanned market movement, it is not regrettable. The biggest advantage of the trading plan is to avoid our emotional trading, impulsive trading and uncontrollable risk trading during the day. You don't have to worry about flaws in your trading plan, you can only improve it if you have flaws. What you are most afraid of is that you do not make a trading plan but instead do unplanned transactions with uncontrollable risks. It's not easy to stick to one thing for a long time, and trading is so lonely, but there is no victory in this world that can be gained without effort. The improvement of a person's trading level is actually accumulated through long-term persistence and summary. Opportunities are reserved for those who are prepared. Trading is a marathon. As long as you persist, you will eventually achieve your small goals.

The core of contract to avoid big losses
Trading is never an easy thing. As a contract trader, what kind of trading makes you most painful? It is painful to miss a trading opportunity that is on the trend, but it is more painful to exit the market with a huge loss when the order that could have been profitable ends up. Do you often encounter such a problem? You make a profit when you open a position, but the price immediately runs in the opposite direction. You are reluctant to leave with a small loss, and finally you have to leave with a big loss or a margin call, and the profit turns into a loss. Fantasy and hesitation are the biggest enemies of traders in the process of holding positions, which will make you forget discipline. You will be reluctant to stop loss when you lose money, and you will be reluctant to stop profit when you make a profit. If you are lucky and exit smoothly, you will retire from the market from then on. Otherwise, you will return all the profits and principal to the market, and you will be heavily in debt. The most direct and fundamental reason for this consequence is the lack of a trading plan. Trading master Livermore described the trading plan like this: "Plan your trades, trade your plans." What exactly is a trading plan? The plan is made before the transaction. Once you enter the market, you have to trade according to the plan, and no other factors can affect you. A trading plan takes your emotions out of the trading process, so it must be highly specific but easy to follow. It can be summarized in three sentences. What do you want to buy, how do you plan to buy it, and what do you do after buying it. "He who wins before the battle has made many calculations; he who loses before the battle has made few calculations. Those who make many calculations win, those who make few calculations lose, and what about those who make no calculations at all?" This sentence comes from "The Art of War by Sun Tzu", which talks about the ancients who had made careful "calculations" before the battle, fully estimated the favorable and unfavorable conditions, and often won after the battle; before the battle, they failed to make careful "calculations" and rarely analyzed the favorable and unfavorable conditions, and often failed after the battle, not to mention that they had no "calculations" before the battle. We all like to compare trading to a battlefield without gunpowder smoke. Trading is the same as marching and fighting. The ancients said "make plans before you act". Anything needs to be planned and prepared before it can be done. The same is true for futures trading. No matter what cycle or product you are trading, you must make a trading plan for each order. The trading plan is about how much money you will lose, not how much money you will win.The most important thing in trading is to try to keep your capital so that you can live well in this market. You need to make plans everywhere in life. Just like farmers have to prepare spring ploughing plans every spring. For example, what crops to plant in the first crop (select opening varieties), when to turn the soil (determine the entry time), when to sow (opening preparation), how long to weed (fund management), what to do when encountering disaster weather (response), etc. Then we make trading plans in the same way. People who know how to trade know how important it is to make plans for trading. The process of making trading plans is the process of carefully analyzing and studying the market. If you want to understand market signals, you must insist on talking to the market every day. The way to talk to the market is: make plans, see the results, then summarize, and persist for a long time. How to make a good trading plan? First, review the market every day and start with the index, take a panoramic view of the overall market situation, and look at the current market situation, including the situation of the foreign market. Then start to review each variety and find out if there are any operable opportunities and what the current market situation is like. Specifically, find out which one is strong and which one is weak in the commodity, why I choose this variety, which variety is more suitable for my trading mode, should I choose one or do all related varieties. Second, then find the entry point. If this position jumps tomorrow, should I make a trade? If it meets expectations, at which position should I enter the market? If it goes in the direction I expected after entering the market, at which position should I exit? If it does not go as I expected after entering the market, where should I stop loss. If it is a volatile trend after entering the market, what should I do? Third, what is the success probability of the selected variety, what is the prepared stop loss ratio, if this position is successfully opened, should I do it intraday or daily. What is the position configuration. Fourth, what is the price range of my opening position, at which point should I plan to close the position for profit, and whether the expected risk-reward ratio is worthwhile. Fifth, if I encounter a sudden black swan event after opening a position, how should I deal with the order in my hand. The above items basically cover several steps of the trading plan. As long as we do these preparations before the market, we don’t have to be affected by the news during the market. We just need to wait quietly and wait for our market to enter.As for the market conditions outside the plan, it is not a pity that we cannot do it. The biggest benefit of the trading plan is to avoid emotional trading, impulsive trading and trading with uncontrollable risks during the trading session. You don't have to worry about the flaws in the trading plan. Only when there are shortcomings can it be improved. The most feared thing is that you don't make a trading plan but instead make transactions outside the plan with uncontrollable risks. It is not easy to stick to doing one thing for a long time, and trading is so lonely, but there is no victory in this world that can be gained without paying. The improvement of a person's trading level is actually the result of long-term persistence and summary. Opportunities are reserved for those who are prepared. Trading is a marathon. As long as you stick to it, you will eventually achieve your small goals.
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