Having traded ultra-short-term contracts for many years, I’ve discovered a harsh truth: technical analysis isn’t as important as you might think; the real determinant of life or death is money management. The ratio is roughly 3:7, with 30% attributed to technical analysis and the remaining 70% entirely dependent on how you manage your funds. My own journey from consecutive liquidation to stable profitability is because I understood this logic and established a comprehensive fund management framework. Today, I want to break down and clarify this system for everyone.

First and foremost, it’s essential to understand that **diversifying your funds is the foundation of survival**. When I first started trading, I would put all my assets into a coin I liked, only to have my account wiped out when a stop-loss was triggered. Later, I realized that you should never commit all your chips to a single trade. My current approach is to split my funds into several parts, trading each separately. This way, even if I experience a series of losses, I won’t be wiped out. The specific numbers are: risk exposure per trade is controlled within 1% of total funds, meaning even if that trade blows up, I only lose 1%. To be even more strict, the total risk for the day is capped at 5%. Using this method, even with bad luck, your principal remains protected.

But that alone isn’t enough; **you also need to let your position size follow the market’s temperament**. When the market is highly volatile, you shouldn’t trade recklessly; you need to reduce your position size accordingly. Conversely, when volatility is low, you can slightly increase your position. I use the ATR indicator (Average True Range) to make this dynamic adjustment, as it quantifies market volatility. My position size is adjusted based on this data. What’s the benefit of doing this? No matter how the market twists and turns, your risk exposure remains at a stable level, preventing you from being overwhelmed by sudden fluctuations.

Next is the **stop-loss strategy, which is the real firewall**. I employ a dual-layer stop-loss mechanism, both of which are indispensable. The first layer is tactical stop-loss, targeting each individual trade. I identify the nearest technical support level and set the stop-loss 1% to 2% below it, ensuring that if my technical judgment is wrong, losses are minimized. The second layer is strategic stop-loss, applied to the entire trading day. If my total loss reaches 5% of my funds, I stop trading for the day—regardless of how many tempting opportunities remain. At this point, your mindset starts to deteriorate, and continuing to trade will only lead to more losses. This dual insurance acts like two safety locks on your account, firmly controlling the maximum daily drawdown.

The last often-overlooked point is **protecting profits when you’re in the green**. Profitable trades are easily destroyed by greed; watching profits shrink and be given back is more painful than losing money directly. My approach is: once a trade’s profit reaches 1x the risk amount of that position, I start moving the stop-loss to lock in profits, preventing the hard-earned gains from being reversed. This way, I can participate in major market moves without over-greed.

Ultimately, fund management is about enforcing a set of rules that rescue you from your own greed and fear. The market is always there, opportunities are always present, but if your principal is gone, nothing else matters.