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Part Two: Position Control

Yesterday, I talked about risk control in crude language. Today, I'll extend that to discuss position management.

In fact, the core of risk control is position management. As we all know, "don't put all your eggs in one basket," which is particularly important in financial markets. Imagine if you were fully invested in a single stock, and it plummeted due to major negative news, your account would suffer a synchronous sharp decline with no other holdings to buffer or hedge against it.

Managing your position size is crucial. You need to diversify across different sectors while also having a focus on certain sectors to allow your assets to grow steadily through market fluctuations. My personal position allocation is: ① Focus on core AI chip/semiconductor holdings ~50%, ② Allocate to AI infrastructure/energy holdings ~20%, ③ Allocate to stable large-cap tech stocks (Google, etc.) ~20%, ④ Materials and others ~10%.

To be able to attack and defend, maintaining sufficient cash reserves is very important. Personally, I suggest your invested position should not exceed 60%, and for the A-share market, it should not exceed 50%.

Market changes often hit our holdings hard, but isn't that also an opportunity for us? In recent years, the US stock market has given us several opportunities to do day trading to lower costs. If you have no cash, can you buy the dip to average down and day trade when everyone is in despair? The answer is no.

Of course, don't rush to add to your positions during a sharp decline. You need to have certain principles and operating rules, such as: ① Execute in batches: Don't add your entire cash position at once; add 10-20% of your cash at key support levels each time. ② Target weight: The weight of a single stock should not exceed 25%. ③ Trigger conditions: Technical pullbacks of 5%-15%, oversold conditions after earnings reports, negative macro data, etc. For major indices, especially the Nasdaq, when it falls by 5%-10% or more over a period. ④ Cash position control: It is recommended to use the cash position (60%-70%) as the core day trading pool + (30%-40%) as a safety buffer to deal with more sudden intermediate declines. ⑤ Stop-loss and take-profit: Lock in profits and sell when there's a 5-10% rebound or when short-term targets are met; limit single-trade losses to no more than 3-5% and cut losses quickly.

Remember, there are countless paths in finance, but risk control is the first rule. Don't be greedy and chase highs, fearing you'll miss out. Opportunities are always there. Whether it's A-shares or US stocks, there will be geopolitical events or technical pullbacks from time to time. Especially during Donald Trump's administration, I believe there will be even more opportunities, as his business mindset determines that he will inevitably create opportunities for day trading.

The market carries risks; invest with caution. The above is merely a personal opinion and does not constitute any investment advice. Profits and losses are your own responsibility.