Position Management Strategies for Small Capital

1. The Importance of Position Management

For small capital, the importance of position management outweighs the judgment of entry and exit points; position management determines whether small capital can survive.

2. The Core of Trading

A. Protecting the Principal First

The principal is the foundation of trading; without a principal, there can be no trading. Maintaining the size of the principal is essential for long-term stable trading.

B. Stable Mindset

Trading is about mindset. If the mindset is unstable, trading will become distorted. Fear or greed leads to erroneous trades.

C. Opportunistic Principle

Trading is about capturing opportunities.

D. Compounding as a Goal

The miracle of wealth comes from compounding; to achieve compounding, one must control drawdowns.

E. Simple Repetition

Long-term trading is simply the repetition of achieving successful trades.

3. Position Management Models

A. Equal Positioning Model

It is recommended to divide into four or five equal positions for quick calculation.

B. Fixed Risk Ratio Model

A general principle is that a single trade should not lose more than 2% of the principal. Use this to calculate the size of each trade's position.

C. Pyramid Model

Suitable for gradually increasing positions in trend trading.

D. Balanced Model

Divided into base positions, rolling positions, and reserves. Never fully invested, always have some reserves.

4. Key Operation Points

A. Concentrated Capital

In the stock market, capital below five hundred thousand is referred to as small capital. Small capital should not be diversified; maintain concentrated attention. It is recommended to focus on one stock, no more than three.

If the profit from a single trade has little impact on the total capital, it loses the meaning of trading.

Small capital only does subtraction; large capital does allocation. Small capital should seize one or two opportunities and invest heavily; this is the path to success for small capital.

B. Learn to Be in Cash

Being in cash is also part of position management. When there are no opportunities or the market is unclear, being in cash can avoid unnecessary losses.

C. Regular Review

Review each trade every weekend, including position management.

D. Equal Emphasis on Skills and Mindset

Good skills require good mindset execution. Position affects mindset.

5. Summary

Position represents risk; position management is a lifeline. Mature traders need to internalize position management as a habit. $BTC #美联储回购协议计划