In the contract market, the gap between retail investors and winners is never about the mastery of technical indicators, but whether one has a complete trading system. Most retail investors trade purely based on feelings, entering the market by following trends, randomly setting stop-losses, and emotionally increasing their positions, ultimately becoming 'chives' in the market; while winners rely on a rule-based trading system that brings every operation under control, achieving long-term profitability. This systematic path of cultivation needs to be gradually built from three dimensions: variety selection, position management, and strategy iteration.
Choosing varieties is the foundation of the system, with the core being 'focus rather than dispersion.' Many retail investors trade multiple varieties simultaneously, and their scattered attention leads to only a partial understanding of the fluctuation patterns of each variety, ultimately resulting in losing track of what’s important. A rational approach is to focus on 1 to 3 familiar varieties, prioritizing dominant contracts with clear trends and good liquidity. When selecting varieties, three major criteria can be followed: first, use the Wenhua Index to assess the overall market trend, combined with macro cycles to confirm whether the varieties are at the bottom; then focus on volatility, choosing varieties where the VIX index is relatively high to improve the efficiency of capturing time value; finally, combine the expiration time, prioritizing contracts that are close to expiration, known as 'last wheel' contracts, as these contracts have a faster decay of time value and higher safety margins.
Position management is the core of the system, necessary to achieve a balance between 'returns and risks.' Reasonable position allocation should follow the principle of 'clear priorities': 60%-70% of funds should be used for regular trend varieties, held long-term; 20% of funds for special operations like 'doomsday rotation,' to diversify risks; and 5%-10% of funds to capture temporary opportunities, with no single variety position exceeding 5%. This layout ensures the stability of long-term profits while retaining the possibility of flexible gains. At the same time, a dynamic adjustment mechanism should be established; when the underlying asset rises and the in-the-money contracts become out-of-the-money, close positions to realize profits and move positions closer to the at-the-money area; when the market is consolidating and the upward momentum weakens, actively reduce positions to lock in profits.
Strategy iteration is the lifeblood of the system. The market is dynamically changing, and static strategies will ultimately be eliminated. The strategy iteration cycle for institutions has been compressed to 7-11 days. Although retail investors do not have the same tools, they can achieve strategy optimization through regular reviews. It is recommended to establish a detailed trading log, recording the reasons for each trade entry, take-profit and stop-loss positions, actual execution situations, and emotional states, analyzing mistakes weekly to correct strategy parameters. For example, when it is found that the original stop-loss level is frequently triggered in a volatile market, it can be appropriately compressed to 0.8% to filter out noise; when the trend is clear, use trailing stops to maximize profits.
From variety selection to position management, from strategy execution to iterative optimization, a complete trading system can isolate human weaknesses from trading. When trading no longer relies on feelings and instead becomes a replicable and optimizable rule-based behavior, retail investors can truly make the leap to winners and achieve long-term profits in the contract market.
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