Three Principles of Contract Trading: How to Protect Profits and Live Longer
When I first entered the market, I treated contracts as a game of chance until I experienced consecutive liquidations and realized: true profit is not about getting rich off a single trade, but about systematically locking in every bit of money that should be earned. Here are three practical principles that helped me turn losses into gains:
1. Profit Protection Rule: Gradually Raise Stop Losses When Prices Rise
When my position is profitable by more than 10%, I will move the stop loss up from the cost price to above the breakeven line (for example, purchase price +2%).
For instance:
When profit is 10%, move the stop loss above the cost to ensure no loss;
When profit is 20%, move the stop loss to the 10% profit level, locking in half the profit;
When profit is 30%, move the stop loss to the 15% profit level, allowing the remaining position to aim for greater space.
The core of this method is to use profits to bear risks, avoiding premature exits while preventing profit drawdown. Even if it’s difficult to accurately judge the peak, it can help let profits roll.
2. Stop Loss Discipline: Unconditional Exit at 15% Loss
I set the loss limit for a single trade at 15%, and once reached, I will immediately cut losses. The reason is:
Adding to a losing position is a trap, and most deep losses stem from the wishful thinking of “waiting a bit longer”;
A 15% loss will not harm the principal fundamentally, preserving the chance for recovery.
The key is to treat stop loss as a trading cost—just like paying rent for a shop, a stop loss is the “tuition” paid for making a wrong judgment. Acknowledging mistakes can help avoid emotional holding of positions.
3. Re-entry Strategy: How to Avoid Missing Out After Selling
If the price drops after a stop loss, I will buy back an equal position in batches at about 5% below the selling price; if the price directly rebounds to the original selling price, I will unconditionally buy back half the position.
Although this may incur transaction fees,
it can avoid two extremes:
Holding onto losses leading to liquidation; missing out on rebound trends after a stop loss.
From practical experience, if a cryptocurrency triggers a stop loss and is bought back three times without profit, it indicates that the current direction is wrong, and one should decisively change positions.
Short-term trading in the crypto world is not gambling, but a game of probability. Through layered profit protection, strict stop losses, and flexible re-entry, even with a win rate of only 50%, one can continue to profit based on the risk-reward ratio. The real risk has never been volatility, but rather uncontrolled positions and wishful thinking.
Follow me @luck萧 , and let’s keep an eye on the market together to find the most certain signal.
