Contract trading carries high risks and tempting profits, but it is also the easiest way to incur losses. If you decide to participate, you must understand these principles—this is not investment advice, but a genuine bottom line for risk management.

First, understand a fact: contracts are a game of small bets for big gains, and losses are normal. The key is how you react after stopping loss. Some will obsessively review and rush to recover losses; others choose to think calmly. The correct approach is to stop trading frequently when hitting stop-loss, adjust your strategy, and not keep betting.

Don’t think about getting rich overnight. Trading requires time and patience, especially when facing losses. Many people's problem is rushing to open positions or even going all-in, which accelerates rapid liquidation.

Trend analysis is a core skill. Once a trend forms, following the trend is the only choice. Trading against the trend is the root cause of losses. Whether you are a beginner or an experienced trader, the market will teach you painful lessons. Once you truly understand the big trend, you will realize why patience is necessary and why frequent trading is not.

The risk-reward ratio must be well controlled; otherwise, no matter how hard you try, you won’t make money. The most basic bottom line is a 2:1 risk-reward ratio, meaning a trade that earns 2 units can offset a loss of 1 unit. If you can’t achieve this, don’t rush to open positions.

Frequent trading is a big taboo. Beginners are especially prone to falling into this trap—thinking every fluctuation is an opportunity, but in reality, most so-called opportunities will trap you. Resisting the impulse to trade blindly can save you a lot of tuition fees.

Only make money within your knowledge scope; this is actually the most important point. Holding positions beyond your capacity is the gateway to hell, especially for beginners. Always set proper stop-losses and don’t fantasize about holding through losses. Stop-loss is not a failure but the price of staying alive to trade another day.

Finally, don’t get cocky when you’re profitable. Overconfidence will lead to losses—this is a brutal lesson left by the market.