Two methods to ensure no loss of principal

[skrimon]

There are only two ways to keep from losing money: one is to have a small stop-loss space (reflected in the entry position), and the other is to not bet too much at once. For example, if you spend $10,000 to buy one lot, you can make $1,000. If you spend $100,000 to buy ten lots, you can make $10,000. The likelihood is the same, but the more you do, the more you earn, and the less you do, the less you earn. But preventing loss should be the top priority. As we've already talked about, if you buy too many lots this time and get stopped out, you'll suffer a significant loss, which goes against the principle of capital preservation.

After making profits, some traders get more and more greedy and add more positions. Adding positions is a common thing to do. For example, if you bought 10 lots at first and then made money in the expected direction, the trader would blame himself for not buying more at the start. Then, he would start to think that the market would continue to move in the way he thought it would, and he would put most of his money into this product, even though he didn't know how to do things right, like taking profits in small amounts.

When you add more positions, the cost changes. You will go from being profitable to losing money as soon as the market slightly changes. At this point, you panic, lose your ability to think, and your greed slowly turns into hope. You hope that this is only temporary, but the loss keeps getting worse. You might get lucky a few times, but it won't be long before there's a risk of a big loss or liquidation.

It's important to realize that you can't get rich from just one market movement, so don't focus too much on this one time. Greed makes people forget about risk, so they don't always think the market will move in the way they expect it to, ignoring the risk of the opposite trend. This is the key to keeping your money safe.

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