Position management is also generally referred to as "fund management". Although this reference is not strict, it can be used in the trading circle. Then what is position management? As the name implies, it is to manage your position.

The maximum number of positions your account can support is your full position, and the ratio of the number of positions you actually hold to the number of full positions is the so-called position ratio. In Baidu, Inc. encyclopedia, this is defined as: in the risk market, risk is controlled by limiting the proportion of funds invested at a single time.

Through the above statement, we should have a more accurate understanding of "position management". Let's start with the following.The necessity of position management, how to manage position, and the mentality in position management.Three aspects to explain how to solve the problem of "small profits and big losses" from this level.

I. the importance and necessity of position management

The premise of the study of position management must be consistent trading practices, fixed use of one or more combinations of forms to participate in the market, otherwise position management will lose its meaning, this point needs to be mentioned in the front.

The reason is very simple, just like you are playing poker, the criteria for each discarding and raising should be the same, otherwise who can tell whether you will only raise a small bet when you win and a big bet when you lose.

No one can accurately predict what the market will be like at some point in the future and what a price it will be. Even if someone does it in a short time, it must be fooled. Fight in the market and don't trust anyone who claims to be able to predict the market. In this way, the uncertainty of the market is obvious in front of us. Since the market can never be predicted, do you have any reason to put all your money into positions?

At this point, you might say, how can you make enough profits without heavy holdings? One thing you need to pay attention to is that risk and profit coexist. You magnify the possibility of chasing profit and at the same time untie the rope that binds risk. Especially in the novice stage, there is no way to guarantee the winning rate in the case of uncontrolled investment is undoubtedly one of the fastest ways to burst positions.

Position management is a precaution against risk, not a means for you to chase profits, just as Baidu, Inc. was quoted at the beginning of the article. Many successful seniors often tell usHeavy positions can only be made when they are fairly certain, even if they are based on the premise that they are prepared to stop losses in advance. After all, survival is an important support for making profits in the market.

From this we can see that position management is essential in the market game. It is never wrong to invest in a smaller position before you can not well interpret the market signal and establish a sound trading system. Although it can't get you out of "small profits" for the time being, it can at least help you stop "big losses" with stop-loss position management, which is an iconic victory throughout the trading process: your money is finally no longer flowing out.

Second, how to manage the position?

If the above is the so-called "world outlook", then in this part we will discuss the "methodology" of position management.

First of all, there is one thing we need to understand: position control does not solve the problem of low winning rate, it just makes the trader die slowly so that he has enough time and opportunity to get his own market. Thus it can be seen that position management can not be discussed separately, but should be combined with each person's trading time period, psychological bearing capacity and entry and exit basis.

For example, trend traders usually do not have a high win rate, but their profit-loss ratio is quite large. This requires strict control of the position in the trend trading to reduce the cost of the trial order, and once the trial order is successful, it is necessary to constantly increase the position to improve their profit-loss ratio to make up for the low success rate.

On the other hand, short-term traders rely on high success rates combined with low profit-loss ratios to achieve profits, so he needs to improve their capital utilization to maximize profits. Of course, short-term traders' stops are very strict. This reduces the risk of heavy positions on another level.

The purpose of position management is to cut losses and let profits run. In order to achieve this goal, we need to follow some principles:

Never put all your money into the market.

Especially in the novice stage or in the state of "small profits and big losses" for a long time, putting all the money into the market will not only magnify the losses, but also affect the mentality of traders to a certain extent. Of course, short-term traders can try to take a heavy position when the stop loss is firm and the profit-loss ratio is reasonable, but make sure that the same standard entry is to open the same position, otherwise there is likely to be an embarrassing situation of light position in profit and heavy position in loss.

2. It is normal to have accidental continuous losses in the transaction, and position management must ensure that after continuous losses, the remaining funds can still open positions with the same number of hands.

If this principle cannot be followed, it is likely that 100 orders could have been issued, but only 90 orders can be opened after several losses in a row, and it will be more difficult for 90 orders to get the funds back to the original level than 100 orders.

3. It is necessary to have a scientific strategy of increasing and reducing positions.

Although trading is a probability game from a mathematical point of view, it is by no means a static model. The market that is changing all the time is likely to show the trend of increasing or reducing our positions after we enter the market. at this time, your win rate and profit-loss ratio are also changing. this requires your position management, including the content of adding and reducing positions.

Is there a general rule for specific position management that is accurate to the numbers? For example, the position must be opened by what percentage, and under what circumstances will the position be increased or reduced according to the proportion of several percent? Unfortunately, no! It has been said at the beginning of this part that position management should be designed in combination with individual entry and exit basis and psychological bearing capacity, which can only provide you with a way of thinking. we need to complete the position management strategy according to their own relevant data.

What data or reference items do you need to base your own position management strategy on? I have made the following statistics here for your reference:

1. Your own risk preference.

You have to determine whether you are radical or conservative, what are your acceptable losses each time, and what are the stop points in your trading system? the acceptable loss is the amount of loss you can bear at a point, which is the number of hands you can open at a time compared to the price fluctuation per point with one hand.

2. The winning rate of trading methods.

Your position management must be determined based on the success rate that trading techniques can provide, so as to ensure that your capital can survive the loss part of the normal proportion of profits and losses.

3. The risk-reward ratio of the transaction, that is, the so-called profit-loss ratio.

The winning rate and the profit-loss ratio are twins, which I have mentioned in many previous articles. With the combination of winning rate and profit-loss ratio, your position management must be able to withstand the "worst period" of trading, or you will die in the night before dawn in your own trading system.

In short, position management is not an independent static part, it is an integral part of the whole trading system. Above we only discussed position management and all aspects related to it, but it does not mean that the trading system is just like this. The entry and exit strategy and position management in the trading system complement each other, both of which are indispensable.

III. Mentality in position management

The first two parts tell you the "world outlook" and "methodology" of position management respectively, and then there is the problem of consciousness. The mentality must not be well dealt with before the problems of the above two parts have not been solved. If your position management has been inspired by the above section, or if you have solved the previous problem, then the problem of mindset is relatively easy.

There are only two kinds of mentality that often occur in position management: if only I had been full when I made money, and if I had had a try when I lost money. Of course, there will also be, such as whether or not to increase the position? Let's take a bet on increasing the position. Or do you want to reduce your position? Forget it, or hurry up to reduce your positions and run away, and so on, but the latter is a derivative of the former.

When carrying on the position management, the best state is to carry out completely in accordance with the management mode that has been designed, without any subjective factors.It's easy to say, but it's not that easy to do, so what should we do?

There are no shortcuts, justMake the position management strategy and other parts of the matching trading system as detailed as possible so as not to give yourself any room for subjective reverie.

Note that this is not for you to make the trading system complex, but to tell everyone to make the trading system as simple as possible as fixed and careful as possible. For example, if an operation is based on an interval, then change the interval into a definite value, or try to compress the range of the interval to find certainty in the system. Only in this way can you lock your heart firmly with rules.

However, the rules still have to be implemented by discipline, so we must abide by the discipline that has been established, even if we use our own reward and punishment mechanism.

With regard to position management, it is almost over. I hope you can get some ideas about position management, which will be beneficial to your trading road. Finally, I hope everyone can trade smoothly and eat both ups and downs.