Principles of investment and financial management in futures trading
First, study first, then act.
The common mistake made by some novices is that they don't know what to do when they enter the market. They don't know much about the market. They never take the time to observe how the market works before taking risks with their money. Usually, when people do something, they always observe first and then act. If you want to learn to dance, you must first see how others dance, and then try it yourself. Traders should carefully check every detail of their trading system. Understand the possible mistakes or various ways to succeed in this system.
The process of this education should include determining your trading motivation, strategy, how to execute trading, trading frequency and trading cost. In the content and method of trading, we should also consider our own personality characteristics. Motivation is very important. Some successful traders can persist in the futures market for a long time because they like trading. They won't let the desire to make big money interfere with their trading decisions. Some successful futures traders believe that making big money is not a good motivation.
? If you use the trading forecasting system to trade, you should test it repeatedly to determine the probability of losing money. They must know their advantages in methodology, work habits and specialization. If they don't know these advantages, they will take great risks.
Second, we should reduce losses in time.
When you lose money, you should make decisive decisions, stop trading and reduce losses; When your trading position is profitable, let it grow further. This is an old creed that has been repeated by many traders. The common problem of many novices is to hold on to losing positions and imagine that the market will reverse. When their positions were profitable, they withdrew from the market prematurely. They were too eager to get the initial profit and lost the opportunity to further increase the profit. They are afraid that the profits they have made will be lost. Successful traders always make up for some small losses with a small amount of profitable transactions. The usual psychological trend of novices is to get out of the game as soon as there is a profit, and put it away as soon as possible, instead of letting the profit continue to grow. Novices in the futures industry should learn to restrain their desire to be satisfied with small profits in order to expand profits.
Third, it is very important to obey the rules and discipline.
Some disciplined traders always make money by using the tried and tested trading analysis system. People who lack the code of conduct often cannot adhere to the consistent trading behavior. In the process of trading, they are half-hearted, capricious and lack of inertia, which will destroy all profit opportunities. The advantages of some good trading systems require perseverance. If a trading system and trading plan are changed or abandoned at will, it may be a turning point for the trading system to make money, so it is very important to maintain consistent trading and behavior.
Fourth, focus on the trading process.
Experienced traders emphasize the need to pay attention to the whole process of trading, rather than whether to make money. This sounds a bit contradictory. Some famous traders believe that losses are inevitable in futures trading, and losses are an inevitable part of the trading process. Traders who focus on making money are likely to lose money, and they cannot cope with the inevitable ups and downs in the investment process. They are in high spirits when they make money, depressed when they lose money, and even panic. Emotional fluctuation in the process of futures trading is not a good phenomenon, so we must pay attention to the whole process of trading calmly.
Futures traders are willing to predict the trend of the market. They can't predict what will happen in the market, but they can control the trading process. In fact, what they can control is the trading process. The biggest problem for novices in the futures market is to pay attention to making money and losing money, not the trading process. An old trader said, if you are afraid of losing money, what do you do? You trade 10, 15 or 20 transactions, one of which is definitely a loss-making transaction.
5. Know when to go out.
Traders should know when to quit the market. No matter what system they use, they know when they have to play, which helps them get rid of the half-hearted approach in trading and stick to a certain system, which can also reduce losses. Stop loss orders can be set to reduce losses. The market may not agree with the timing of your entry. The market is not interested in when you leave. The market always operates according to its own laws. You must set a stop-loss order according to the operating rules of the market. Considering that sometimes when your trading position loses money, it is a turning point, so you can't set the stop loss order too dead. When placing a stop loss order, you should consider the fluctuation of the market.
Instructions should be based on market indicators, for example, the average market price, usually the lowest price at a certain stage. Some transactions will set stop-loss orders at random, regardless of the operation mode of the market, so they are likely to lose money. If the market order is specified on the basis of a certain amount, it will often reduce the amount of losses, but it will increase the number of transactions with losses. If the stop loss order is set too dead, a series of loss-making transactions may occur. There is a basis for when to withdraw from trading and suspend trading positions. Hopes of avoiding trading? Hoping to trade is hoping that the market will reverse when there is a loss.
6. Manage your money well.
Senior traders suggest setting a certain proportion of funds to take risks. This percentage of funds that can bear risks can be 7% or 10%. Never change this percentage. It is very important to maintain the risk percentage of a lasting portfolio. Some novices think that one or two transactions can make a lot of money, which is a big difference between professional traders and amateur traders.
Setting a risk percentage for your own funds can reduce the transaction scale, maintain capital and limit the degree of loss in the case of continuous losses. With the reduction of the number of trading contracts, the withdrawal of funds can be restricted to make the scale of transactions consistent with the scale of funds. When some novices encounter position losses, they often can't stand the temptation and take more money to take risks, hoping to reverse the loss situation. The greater the risk, the greater the loss.
VII. Interacting with Trends
? Trend is your friend? This is a phrase that some old futures traders keep repeating. This is also the only way for futures trading. Successful traders believe that it is not important to predict the trend and ups and downs of the market, but it is important to follow the trend. Many traders suggest following the trend of market development, in other words, following the trend, following the trend until the end of the trend. Advice from some experienced futures traders: Never make irresponsible remarks about the market and express some opinions. The general trend of market development is your friend. You should trade with the trend and let the market tell you which direction to go. A famous futures trader once said that when the market develops into a big trend, it is time to make money. When the market turns to a fork, you can't make a lot of money.
Eight, don't be emotional in the transaction.
Experienced traders remind that it is very important not to trade by feeling, especially when trading multiple varieties of futures. Professional traders emphasize: remember that the market is not an individual's behavior. They believe that the loss-making transactions are often caused by emotions, and some novices tend to forget everything and trade with emotions, so they are bound to be repeated, lacking inertia and unable to think clearly. It is important to develop a trading method and stick to it. If the method is effective, discipline and patience are the key to making money. Novices tend to get emotional, but good traders don't. Don't insist that the market is wrong because a position is correct. The market is always right, and the market has nothing to do with your views and positions.
Think about who is losing money.
An interesting way for some reputable traders to arrange trades is to think about who you want to make money from. Everyone who enters the market obviously wants to make money, but it is impossible for everyone to make money. Someone is always losing money. If you earn, you lose, and if you lose, you earn. A senior futures trader thinks that you should know who you want to profit from. If you buy it and think it's right, then the seller thinks it's right. People want to make money from people who make mistakes. Some trend traders or trend traders usually hedge to make money, because hedgers usually sell when the market goes up and buy when the market goes down.
Ten, always keep a humble attitude.
Those who think they are smarter than everyone in the market think they will always be lucky. This view will not last long. You should be modest in front of the market, otherwise the market will let you know that this attitude will go wrong and the market will make you modest. This is what a famous trader said. Some traditional views are usually wrong. When you think the information you have is great and valuable, maybe someone else already has it.