Recently, I tracked the trading records of a seasoned trader, who made 16 profits, 1 loss, and 1 break-even trade. His win rate is indeed impressive. But he also admitted—recent market fluctuations have been mild, and each trade only yields a small profit, reflecting a cautious and conservative trading style.

He mentioned a core concept that left a deep impression on me: trading is essentially about planning your trades, not relying on luck. Before placing an order, you should clarify three things—where to set the stop-loss, how much loss is acceptable before exiting, and what your risk tolerance is. Whether you follow someone else's strategy or make independent judgments, this loss budget is a must.

Regarding stop-loss settings, he shared an interesting logic. For example, with major cryptocurrencies like Bitcoin, some traders prefer a loose stop-loss (e.g., 3000 points), while others prefer a tight stop-loss (e.g., 1000 points). At first glance, the loss range seems quite different. But in reality, a trader with a 3000-point stop-loss might only risk $1000, and a trader with a 1000-point stop-loss can also risk $1000—this difference lies in the position size.

So the logic makes sense: if your stop-loss range is wide, you should reduce your position size; if your stop-loss is tight, you can moderately increase your position. This way, you ensure that in the worst-case scenario, your loss stays within your risk tolerance. In short, risk management always comes before profit.