Here’s a compilation of valuable trading insights and principles based on 20 years of experience from a seasoned futures trader.
Investment Prerequisites
Ensure personal life and family financial security.
Never invest money you may need urgently.
Avoid borrowing or using credit cards for investment.
Invest only spare funds and maintain sufficient cash reserves for emergencies.
Investment Approaches
Full-Time Investor
Time: Plenty of time means you should focus on mastering your business.
Capital: Large capital allows you to invest in high-risk, high-return opportunities.
Diversification: Invest across a wide range of assets: stocks, futures, funds, gold, options, forex, insurance, real estate, etc.
Part-Time Investor
Time: Limited time, with average business knowledge.
Capital: Flexible, either large or small capital.
Low-Risk Investments: Focus on low-risk investments with long-term potential.
Diversification: Similar to full-time investors but may require more conservative strategies.
Avoid Partnerships: It's best to avoid joint investments.
10 Major Pitfalls in Futures Trading
Full Margin Trading: Always avoid full margin. Overleveraging leads to losses.
Frequent Trading: Lacking proper technical guidance and analysis leads to poor decisions.
Counter-Trend Trading: Risky behavior with low probability of success.
Locking in Positions: Refusing to accept losses can compound errors.
Averaging Down: Trying to lower the average cost of a losing position can worsen losses.
Attempting to Pick Tops and Bottoms: No stop-loss leads to emotional decisions and losses.
Switching Between Long and Short: Chasing perfection leads to aimlessness.
Blindly Following News: Lack of independent analysis results in poor decision-making.
Lack of Self-Reflection: Constantly doubting the market increases fear and confusion.
Rigid Long-Term Plans: Markets are unpredictable, so long-term plans may be overly restrictive.
Major Losses for Beginners
Overleveraging: Turning a small amount into a large sum requires many successful trades, but one major loss can wipe out the account.
Fighting the Trend: Don’t bet against the long-term market trend.
Frequent Trading & Losses: Emotional decision-making leads to getting "caught" in bad trades.
Procrastination: Delaying decisions can lead to greater losses over time.
Greed: Greed is the downfall of many traders.
Key Principles for Futures Success
Go with the Trend: Don’t fight it; let the market flow naturally.
Think Big, Act Small: Focus on the larger picture while making careful decisions.
Forget Cost: Focus on the trade’s potential, not the price you paid.
Stay Calm: Focus on the process, not the profit or loss.
Risk Management First: Only risk what you can afford to lose.
Emotional Control: Stay calm and let wealth accumulate naturally.
The "Eight Rights and Eight Wrongs" of Futures Markets
Right: Follow the trend. Wrong: Go against it.
Right: Trade light (small positions). Wrong: Trade heavy.
Right: Know when to be satisfied. Wrong: Be driven by greed.
Right: Protect profits with stop-loss orders. Wrong: Let trades run without protection.
Right: Be objective in analysis. Wrong: Let subjective analysis control decisions.
Right: Be patient and wait. Wrong: Be impulsive.
Right: Add to profitable trades. Wrong: Add to losing trades.
Right: Stay emotionally balanced. Wrong: Let fear or greed control your decisions.
Futures Market Advice
Create Your Own Trading Rules: Develop a trading system based on testing and continuous refinement.
Follow Discipline: Control fear and greed, always respect the market’s risks.
Trading Procedures
Acknowledge the market’s nature and avoid emotional trading.
Stick to your trading system and execute it consistently.
Discipline is essential; without rules, chaos follows.
Avoid impatience—rushing against the market’s natural flow can hurt your performance.
Operational Principles
Never trade markets you don’t understand.
Avoid going against the trend or chasing small reversals.
Skip sideways markets (consolidating markets).
Never trade with full margin.
Stick to strict stop-loss rules without hesitation.
Money Management
Total Exposure: Keep total positions within 50% of your capital.
Opening Positions: Use 10%-15% of your funds for each position.
Adding to Positions: Limit to 20%-25% per asset.
Stop-Loss: Ensure total losses on any single asset do not exceed 5%.
Never Add to Losing Trades: Only add to winning positions.
Keep Emotions in Check: Stay calm to maintain profitability.
Key Reminders
Never use spare money for investments.
If you are overly fearful or impulsive, trading may not be suitable for you.
Avoid overtrading.
Always confront the market directly—don’t fantasize.
Take breaks when necessary.
Avoid blindly following the crowd.
If uncertain, wait for better clarity.
Be decisive—don’t get stuck in hesitation.
Forget past prices.
Patience and knowing when to exit are crucial.
Wisdom from the Masters
95% of profits come from just 5% of successful trades.
Successful trading involves long-term strategies, stop-losses, trend following, and light positions.
Keep your trading strategy simple and effective.
Maturity in Trading Judgment
Stable, consistent profits.
Clear, repeatable signals.
Manageable risk.
A strategy that’s easy to replicate.
Final Thoughts
The most important thing in trading is to develop your own set of rules. The market will often provide a clear direction, and your job is to follow that direction, not predict changes in direction. Recognizing market movements and adjusting your positions accordingly is key to long-term trading success.
