Core Insights - The article discusses various money management techniques that traders can use to determine position sizes for their trades, emphasizing the importance of consistency in position management to avoid significant account volatility. Group 1: Fixed Percentage Method - The fixed percentage method involves setting a risk percentage of the total account balance for each trade, typically between 1% and 3%. For example, with a $10,000 account and a 1% risk level, the risk per trade would be $100 [2]. - This method provides equal weight to each trade, resulting in a smoother account curve and reduced volatility [2]. Group 2: Averaging Up Method - The averaging up method allows traders to add to their positions as the trade moves into profit, thereby increasing the number of contracts held [3]. - Advantages include smaller potential losses on initial trades and the ability to capitalize on strengthening trends [5]. - Challenges include finding optimal entry points for adding to positions and the risk of quickly offsetting profits if prices reverse [6]. Group 3: Averaging Down Method - The averaging down method involves increasing position size when trades are losing, with the aim of reducing potential losses if the trade reverses [7]. - The strategy can reduce potential losses and help return to breakeven faster [9]. - However, it is often misused by inexperienced traders, leading to significant losses due to emotional decision-making [10]. Group 4: Martingale Method - The Martingale method involves doubling the position size after a losing trade, hoping to recover all previous losses with a single win [11]. - The main advantage is the potential to recover all losses with one profitable trade [12]. - The significant risk is that a series of losses can deplete the entire trading account, as demonstrated by a statistical example showing rapid account depletion after consecutive losses [13][14]. Group 5: Anti-Martingale Method - The anti-Martingale method aims to eliminate the risks associated with the pure Martingale approach by increasing position size after winning trades [16]. - This method allows traders to use profits to take on additional risk, potentially leading to greater gains [18]. - However, a single loss can wipe out previous profits, necessitating careful management of position sizes [20]. Group 6: Fixed Ratio Method - The fixed ratio method is based on a trader's profit factor, allowing for position size increases only after reaching a predetermined profit threshold [21]. - This method ensures that position sizes only grow when actual profits are realized, providing a controlled approach to scaling [22]. - The subjective nature of setting the profit threshold (Delta) can lead to significant differences in account growth rates [23]. Group 7: Kelly Criterion - The Kelly Criterion aims to maximize compound growth by calculating the optimal position size based on win rate and payout ratio [24]. - While it provides a structured approach to position sizing, it often underestimates the impact of losses and drawdowns [25]. - A common practice is to use a fraction of the Kelly Criterion to mitigate risk, as full application can lead to substantial drawdowns [27][28].

Core Methodology - The most suitable method for beginners is the "fixed ratio method," where predetermined stop-loss and take-profit levels are set, such as "stop-loss at 5% and take-profit at 10%" [3] - Another approach is the "key price level method," which involves identifying support and resistance levels, for instance, selling if the stock price drops below a support level of 10 yuan and taking profit if it rises to a resistance level of 12 yuan [3] Execution Techniques - After purchasing stocks, it is crucial to immediately record the stop-loss and take-profit points, and even set "conditional orders" in trading software for automatic execution at these levels [3] - Many beginners struggle with execution due to emotional hesitation, leading to losses or missed profits, emphasizing the importance of decisive action [3] Investment Philosophy - Stop-loss is viewed as a means to "preserve capital for future trades," while take-profit is about "securing profits," highlighting the necessity of strict adherence to these strategies for long-term survival in the A-share market [3]