🚩🚩🚩The three main rules that help beginners consistently make money in the trading market

In theory, trading is a very simple matter: buy low, sell high, and profit from the difference, but if it were really that simple, why are so many investors losing money in the trading market?

Today I will share three trading rules that beginners often ignore but are very important. If you can apply them to your trading system, although they won't guarantee you make big money, they will definitely reduce your losses, or even prevent losses altogether, allowing you to achieve continuous profits.
✅The first rule: Risk management and stop-loss. In the world of investing, risk management is always a well-worn topic—very boring but extremely important! Short- to medium-term trading, although it has speculative elements, is still within the scope of investing. Everyone should know that investing involves risks. If you invest too much and only make a few trades, your principal can be wiped out quickly. So, how do you continue to play this game? Controlling risk is the only important thing in trading! When you can't control risk, no matter what strategy, indicator, chart pattern, or trading theory you use, it will be sidelined. Without risk management, no matter how much money you make through luck, you will eventually lose it all due to lack of strength.

As a new trader, few consider the concept of risk management. Most people in the trading market lose money. Most understand this principle but still can't resist the huge profits from trading, just like smokers ignoring the health warnings on cigarette packs. Human arrogance and pride make us think we are right most of the time. When entering the trading world, we subconsciously believe our judgment should be correct more often than wrong. But the reality is quite the opposite. Since humans keep making mistakes and misjudging, we need to identify which mistakes are fatal and avoid them!

For example, if your trading account has $10k and you lose $3,000 on a single trade, you won't need many trades to blow up your account and lose all your money. So, before trading, you must first consider: what is the maximum loss you can tolerate on a single trade? For example, my risk setting is 1%. Note that this is not about price fluctuation, but about losing 1% of the principal in one trade. If I have $10k to trade, the maximum loss I can accept is $100. If I am very unlucky and my strategy is poor, I would need to lose 100 times in a row to wipe out all my capital. This gives me enough time in the trading world to make mistakes and learn. As long as I still have capital and can stay in the market, I have the chance to recover through experience and continuous learning! A 1% stop-loss is my setting as a low-risk preference. As a trader, you can set your risk according to your risk appetite and capital size. My advice is to keep risk within 1%-5%. Once you know the maximum loss for a single trade, you can use that to calculate your position size with a stop-loss. Risk and reward are always proportional. When you’re thinking about making a lot of money, also consider: if you lose that amount, will you be able to sleep peacefully? If not, you shouldn’t take that trade. As a beginner, spend some time finding the right balance point that suits your risk preference!

✅The second rule: Completely abandon the mindset of trying to top or bottom pick. Always trade in the direction of the trend on the right side. Due to human greed, beginners tend to try to buy the bottom, but most end up suffering losses in the middle of the move and are forced to cut losses painfully! Because bottom and top picking are very left-side contrarian trades, I strongly advise beginners not to do such left-side trades. Based on my experience, long-term stable profits come from maintaining a right-side trading mindset. When the trend emerges, just follow it and take some profits. There’s no need to try to enter at the lowest price or sell at the highest. Highs and lows are not that important to me because earning a portion of the move is enough! Trend trading means trading with the trend, which can last a very long time—longer than most people imagine. Beginners are often influenced by market news or predictions from big influencers, leading to follow-the-leader style trading, guessing tops or bottoms, and ending up with huge losses. Once a trend is established, as a beginner, just follow the trend direction. There’s no need to chase noise in the market or do fancy moves like reversing positions or trying to trap both sides. When you gain experience and improve your win rate, then you can try those fancy tactics.

✅The third rule: Don’t trade on too small a timeframe. Beginners love to look at small timeframes—1 minute, 5 minutes, 15 minutes. Although the same strategy should theoretically work on any timeframe, in practice, the smaller the timeframe, the more strategies tend to fail. This is because small timeframes are full of noise—various false signals. Small candlesticks are chaotic, but on larger timeframes like 4 hours, the overall trend is much clearer. Market news often causes sharp fluctuations on small timeframes but doesn’t determine the larger trend. You must have a macro perspective. By observing the bigger picture, you can find better entry points, which is very helpful for trading. Larger trends, especially those formed on bigger timeframes, tend to last longer and are less easily disturbed by news. When you identify a trend, it’s easier to follow. A single candlestick on a daily or 4-hour chart takes only a day or four hours, so you don’t need to watch the screen constantly or spend too much energy and time. If you rely on very small timeframes, your focus will naturally be glued to the chart!

These three rules are advice for beginner traders. To make consistent money in trading, what you need isn’t necessarily indicators or information from others, but a continuous upgrade and transformation of your trading philosophy and mindset! (Article excerpt from 2023—ANKE Trading Notes) Recording my daily trading, sharing real-time thoughts and trading details, updated weekly. Disclaimer: Contains third-party opinions, not financial advice, and may include sponsored content. See "Terms and Conditions" for details.