But in fact, no one can change the approximate profit-loss ratio in the market, and many people are doomed to lose money. There are still many people who just haven't reached the end, and the bull market that belongs to them hasn't arrived yet, so they are forced to leave.
Therefore, one of the most important principles to survive in the market is to "keep the principal". The current 10 thousand may be 100 million in the future, which depends on position management.
1: Why do you want to control positions?
From a certain point of view, controlling positions is actually controlling the total risk, especially preventing accidents. Markets are always like this. Even if you look at the right market direction and choose the right entry point, you can't avoid the occurrence of small probability accidents. For example, suddenly reverse one or two stop losses and then resume the previous trend. Things like this are not uncommon in the market. Only when the position is properly controlled can we avoid excessive losses.
Here, remind every trader friend not to underestimate small probability events. Because no matter how many times you succeed, an accident may cost you years of hard work. Therefore, in the field of venture capital, you must always keep your eyes on the 5% fatal accident. Only when 100% guarantees that it will not threaten the life and death of your transaction can you give it a try. Controlling positions is the most basic method to control risks. If you can't do this, then no matter how well others do it, the result is meaningless, just like any number multiplied by "0" is zero.
In addition, we emphasize controlling positions, not only because we can control risks, but also because position management can expand profits. For example, once a long-term trader makes the right direction, every time he breaks through a resistance level, he will increase his position in a decreasing way, so that his position in profit can be greater than that in error.
2. Method of position management
There are three commonly used position management methods, namely rectangular position management method, funnel position management method and pyramid position management method.
1, rectangular position management method
This method is a fixed ratio of the amount of funds entering the market to the total amount of funds when opening a position for the first time. If the market develops in the opposite direction, it will gradually increase positions and reduce costs in the future. Positions will follow this fixed ratio and form a rectangular shape, which can be called rectangular position management method.
The advantage of rectangular position management method is that only a certain proportion of positions are increased at a time, the position cost is gradually raised, the risk is shared equally, and the average management is realized. Positions can be well controlled, and if the direction of the market outlook is consistent with the judgment, it will gain rich benefits.
The disadvantage is that the initial average cost rises rapidly, and traders can easily fall into a passive situation, and the price cannot cross the breakeven point and be trapped. Like the funnel method, the more reversed the change, the larger the position. To a certain extent, it is bound to be held in full position. As long as the price changes slightly in the opposite direction, it will lead to short positions.
2. Funnel position management method
Funnel position management means that the initial amount of funds entering the market is relatively small and the position is relatively light. If the market runs in the opposite direction, the market will gradually increase positions, thus diluting costs and increasing the proportion of positions. The position control of this method is like a funnel, so it can be called funnel-shaped position management method.
The advantage of this method is that the initial risk is relatively small, and the higher the funnel, the more considerable the income.
The disadvantage is that this method needs to be based on the premise of consistent judgment on the market outlook. If the direction judgment is wrong, or the direction trend cannot exceed the assembly standard, it will be in an unprofitable situation. Under normal circumstances, the position will be heavier at this time, the available funds will be less, and the capital turnover will be difficult. In this position management mode, the more reverse fluctuations, the bigger the position and the higher the risk. When the reverse fluctuation reaches a certain level, it will inevitably lead to Man Cang holding. At this time, as long as the direction fluctuates slightly in the opposite direction, it will lead to an explosion.
3, pyramid position management method
The pyramid-shaped position management means that the initial amount of funds entering the market is relatively large. If the market runs in the opposite direction in the afternoon, it will not add positions. If the direction is the same, it will gradually add positions, and the proportion of adding positions will become smaller and smaller. Position control is a form of big bottom and small top, like a pyramid, so it is called pyramid position management method.
Its advantage is that the position is controlled according to the rate of return. The higher the winning rate, the higher the position used. Use the persistence of the trend to add positions. In the trend, you will get high returns and low risk rate.
The disadvantage is that in a turbulent city, it is more difficult to obtain benefits. The initial position is relatively heavy, and the requirements for first admission are relatively high.
Three principles of position control
1, the position should not be overweight.
In futures trading, the proportion of funds usually used shall not exceed 30% of the total amount of funds. If the position is too heavy, a small fluctuation in the disk is enough to make the trader suffer heavy losses. Moreover, jiacang will also affect the mentality at the time of trading, which in turn will affect the trader's judgment on the subsequent price trend. Remember, the most important thing in futures trading is to keep a good attitude.
2. Don't hesitate to add positions.
At the beginning of the market, if the judgment result of the market development shows that you can go into battle lightly, and the development trend of the market in the later period is the same as that of doing, then you should not hesitate to add positions to the normal position, so as to increase profits.
3. Never add positions at a loss.
For traders, if you lose money in your account, it means that you don't have a good grasp of this market, or you have chosen the wrong entry point and timing. If you choose to increase your position in the case of account loss, once you encounter a unilateral market, you can only make your account suffer greater losses, and the result of the transaction can be imagined. Therefore, if there is a loss in your account, the best solution is to stop the loss resolutely, instead of hoping to increase the position to adjust the position cost.
To sum up, no matter what job management method you adopt, the key is implementation. As a professional trader, don't let a temporary impulse easily break through your position control standards.