How to control risks in futures investment

Our risk tolerance depends on our income beyond investment. If an investor can earn 5,000 per month in addition to investing, then losing 2,000 in one month will not trouble him. But if he loses 50,000 yuan a month, he will become irrational because of fear or eagerness to make money. Therefore, investors should set a limit on their monthly losses based on their income. There is a joke about this: a doctor found his patient and said to him: "I have bad news and even worse news to tell you." The patient said: "What bad news?" The doctor said: "You The test report has come out, you can live for 24 hours.” The patient was shocked: “Is there any worse news than this?” The doctor said, “I have been looking for you since yesterday!” The bad news is: one day, he suddenly discovered that there was a problem with his transaction; the even worse news is that by this time, he had lost all his money. Therefore, it is necessary to prevent risks in advance from an investment perspective. Second suggestion: Have a plan before trading. Ordinary people who are new to investing can easily trade based on their feelings and follow the news everywhere. Hong Kong people call this type of investors "blind knights chasing the wind and swords". It cannot be said that such an operation will definitely lose money, but the probability of making money is really not high. So, what is the plan? That is, before trading, find out the buying and selling points before trading. Buying and selling points are the basis of all investment concepts. If investment is regarded as a building, buying and selling points are the foundation. All kinds of investment skills, mentality, and concepts are based on buying and selling points. There are many ways to find buying and selling points. Investors should refer to relevant technical analysis books. Anyone engaged in any career will face many confusions, but there is only one confusion in investing - why not make money? Some people answered "because they did not follow the main force", some said "because there is no reliable news", and some people said "because they did not find the secret to prediction". But none of these are correct. The real answer is: because I don’t understand investing. There is a short quiz to test everyone's understanding of investment: There is a stock commentator who often recommends stocks on TV. After a period of observation, you find that six or seven of the ten stocks he recommends can only go up. Now you want to ask him To help you manage your finances, I would like to ask: How much money are you prepared to give him to operate? There are 4 answer options: A. All funds; B. 50% of funds; C. 20% of funds; D. Not even a penny. Many people think that investing is to find a stock that can rise, buy it and wait. It seems correct on the surface, but in fact, investment is a series of events, which can be basically divided into three parts: first, pick a product that can rise. This process is called prediction; second, at what price to buy and when to buy; Third, what should I do if it falls after I buy it? What should I do if I sell it after making money, or what should I do if it falls back again if I don’t sell? If it continues to rise after selling, should you still chase it? In this process, the importance of prediction accounts for 20%, buying accounts for 30%, and selling accounts for 50%, so the correct answer to the above test is C. Investors who mistakenly overestimate the importance of prediction often lose money. The reason is simply understood as forecast errors, so analysts often blame analysts for not looking in the right direction. Once, a customer asked me, "Didn't you say this product would go up? Now it's down! What are you going to say?" I replied, "I can only say congratulations, because you can buy it at a lower price." The point is here, the decline is not a bad thing for everyone. If you are short, it is a good thing for you. So, the issue is not with the rise or fall, but with the timing of shorting and holding positions. If we hold short positions most of the time when our predictions are wrong, we will have enough positions when our predictions are successful. Then the transaction process will be beneficial to us. That’s the next trick – how to sell. In investing, buying is just a small step. After buying, the question investors will immediately face is "to sell or not to sell?" This is the most difficult part. Such decisions are easy to make during the day, but often regret later. Therefore, we must consider the selling points before investing. Let’s talk about stop loss and take profit first. After buying, set a specific stop loss price. The purpose of this is to terminate a losing position in time and avoid unlimited expansion of losses. Stop loss is an old trick. Most investors will fully understand it within a week of being exposed to futures. However, once it is actually applied, problems arise: when you misread the market, you will frequently stop losses, and profitable positions will often be stopped. . To a large extent this is because there is no active profit taking.

If the price rises, the selling point becomes a take profit, because the selling point is the pressure level. A sell signal appears here, which means that the price may reverse, and profits should be locked in first. Stop loss and take profit are two legs in trading. If stop loss is the only one, normal market adjustments will also cause frequent stop loss. If you only take profit, you will suffer huge losses if you make a mistake in the trend. Stop loss is to ensure the safety of the transaction, but stop loss itself is a loss. This loss must be made up with profit. Stop loss is to lock in profit to make up for the loss. This complex relationship can be explained with a simple metaphor: There are two brothers who go to the underworld. The elder brother is responsible for eating and fighting, but after each meal, the younger brother needs to pay the bill. If the younger brother does not help the older brother pay the bill, the older brother cannot help the younger brother fight. If the older brother If he doesn't help his brother fight, no one will pay for him. This elder brother is called stop loss, and the younger brother is called stop profit. The most ideal situation is to use the profit from the stop profit to make up for the stop loss. This has two advantages: 1. Trading is sustainable and you can play this game for a long time; 2. Once the market judgment is wrong, it will not have much impact on you. It’s not over yet. It’s just stop loss and profit. Investment has become a physical job. To make big profits, what you need is a position—a position that is making money. This requires adding the concept of a target level. Before buying, you need a target level. When there is no take-profit signal, hold it; buy again, and if there is still no take-profit signal, continue to hold; buy again until there is no take-profit signal. The price reached the target level and positions were gradually cleared and left. This is a complete transaction process. There are two purposes for setting up target positions: 1. Stop loss and take profit are to make the short-term advantageous, and the target position can maintain the short-term advantage all the way to the long-term; 2. Convert predictions into operational basis to provide clear direction for transactions. If there is no target, prediction and trading are two completely unrelated things. This is what I call the trick. To sum it up, there is only one sentence: one center and two basic points. Taking the target position as the center and stop loss and profit as the two basic points. That's all there is to the trick. Many people believe that when investing, you need to follow the main players, have inside information, and predict events like a god. I think these are all uncontrollable factors and are all elements of luck. In fact, when investing, it is most taboo to pay attention to those things that are uncertain. We only need to pay attention to those things that are certain - the goal is certain, the loss is certain, and the profit is certain. What we need to learn is how to manage them. Zeng Guofan said, "A gentleman only does human affairs and does not consider the destiny of heaven, because the destiny of heaven lies in human affairs."