Effective Trading Strategy: Risk Management and Trend Utilization

One of the most common mistakes that individual investors worldwide often make is holding losing positions for too long but rushing to take profits in profitable positions. This psychology often stems from focusing too much on the account balance rather than paying attention to important indicators such as market trends or trading volume. To be successful in trading, a complete mindset change is needed: to let profits grow and cut losses quickly. Basic Rules: Self-discipline is the Key Factor To achieve high efficiency, it is necessary to build and adhere to clear discipline on stop-loss and take-profit levels. For example, an effective strategy could be: Cut losses immediately when losses exceed 5% of initial investment capital. Only take profits when the profit has declined to 15% after reaching its peak, in order to optimize profits as the market continues to rise. Even if the successful transaction rate is only 50%, applying this strategy to 100 transactions can generate profits of up to 300%, thanks to letting profits grow larger than losses. However, the biggest challenge in trading is not the tool or strategy, but the management of emotions. Greed and fear often lead to impulsive decisions, causing significant losses. Riding the Trend: Deciding to Follow the Market Flow The golden rule in trading is to always follow the trend. Once the trend is established, there is no need to analyze too deeply or speculate on the market. Just follow the market direction and avoid speculating or bottom fishing during a steep decline. Short-term trend analysis: Use daily moving averages and track trading volume breakthroughs. For medium and long-term trends: Observe weekly moving averages to assess the market's sustainable direction. Remember that trading against the trend is a risky move with a low chance of success. Instead, focus on high-probability opportunities and be willing to admit when the market doesn't behave as expected. Risk Control: The Determining Factor for Long-Term Existence In trading, risk control is much more important than seeking short-term profits. A good investor is someone who knows how to cut losses in time and protect capital. For short-term trades, you should: Monitor the 15-minute, 30-minute, and 1-hour charts to find suitable entry and exit points. Use technical indicators such as KDJ to identify trading signals and OBV (On-Balance Volume) to analyze the intentions of large investors. Trading Psychology Strategy To avoid mistakes from emotions, always keep a cool head and follow the plan that has been set. Some psychological tips help to trade more effectively: Do not expect too much from "loss recovery" and forget about risk control. Learn to accept small losses to avoid bigger losses in the future. Evaluate your strategy regularly and improve based on actual results. Conclusion Success in trading does not come from luck but from discipline, patience, and emotional control. Remember that the market is always fluctuating, but if you stick to the trend, cut losses in time, and let profits develop, the opportunity for success is always within reach. The only way to survive and thrive in the market is to continuously learn, improve yourself, and adhere to your trading principles.