Part 1: Why You Should Never Go All-In
Going all-in may feel good momentarily, but a price pullback will trigger a forced liquidation. Never invest all your capital in a single position. Keep sufficient margin to withstand market volatility—survival is the prerequisite for seizing future opportunities.
Part 2: Reasonable Position Ratio
Core Principle: The size of a single position should not exceed 10% of your total capital. Even if you suffer consecutive losses, you will still have enough principal to make a comeback.
Part 3: Do Not Add to Losing Positions
Adding to a losing position is a critical mistake! You might think it lowers your average cost, but in reality, it brings the price closer to the liquidation threshold. A slight further price drop will directly lead to forced liquidation.
Part 4: Stop-Loss Is a Lifesaver
Set a stop-loss for every position you open. When losses reach the preset level, the position will be closed automatically, which helps preserve your principal for the next trading opportunity. A stop-loss is not a loss—it is an acknowledgment of a wrong call and a chance to start over.
Part 5: Common Mistake 1 – Frequent Random Trades
Mistake 1: Frequent random trades. Opening dozens of positions a day will result in profits that cannot even cover the trading fees.
Part 6: Common Mistake 2 – Not Using Stop-Loss
Mistake 2: Not using stop-loss. When you incur losses, you want to hold on stubbornly, but the losses will only keep mounting until you face forced liquidation. A stop-loss preserves your principal for future opportunities.
Part 7: Common Mistake 3 – Emotional Trading
Emotional trading. Increasing position size to chase rallies after making profits, or opening positions out of spite after suffering losses. Decisions made in a fit of emotion are wrong nine times out of ten.
Remember this mantra: Light position, stop-loss, and emotional control. Light positions keep you in the game longer; stop-loss protects your capital; stable emotions are the key to making profits.