As the frequency of transactions continues to increase, the probability of profit will inevitably decrease, and the probability of loss will inevitably increase. Losing money is basically an inevitable probability.
I myself was once a victim of frequent trading. I cannot say that frequent trading is fatal, but it is true that frequent trading is difficult to make a profit. Even though I have been trading for more than ten years now, my mentality and finances are relatively stable. If I were to go back to the state of frequent trading, I might still not be able to control myself, because human nature is too difficult to overcome.
When I first started trading, I could complete dozens of orders a day, from noon to night without stopping. I could skip meals or sleep, but I had to trade.
Later, I looked back and reviewed my own situation. I think there are two main reasons for my losses:
1. Very high transaction costs.
At that time, I traded dozens of times a day, in and out, and I didn’t know much about the industry and the handling fees. I didn’t feel anything after one or two times, but after a month, I basically lost money. Later, when I looked back at my transaction costs, I was shocked. Frequent transactions will generate high handling fees, which is not worth it.
2. Frequent trading will most likely cause you to lose control of your emotions.
I felt that frequent trading would put you in a state of extreme excitement, because there would be gains and losses in transactions, and the results came out quickly, which was very exciting.
After I got carried away, all the so-called technical standards were useless. I just wanted to follow my mood. For example, I used to use the 5-minute K-line to draw trend line break transactions. After continuous losses and losing my mind, I didn’t care whether the trend line was broken or not. Any technical standard could be the reason for me to make a trade. I felt unwilling to give up and wanted to try again. When I saw the market fell a little, I thought it would rebound, so I quickly made a trade.
The original trading plan is of no use now. I had set rules for myself, such as how much position to take, how to increase positions, etc., but all the rules are now invalid.
After losing eight or ten times in a row, you want to make your money back quickly, so you look for an opportunity that you think is good and invest all at once, hoping to make back all the previous losses in one go.
As a result, I was extremely excited during the holding process, until the market went in the opposite direction and I stopped the loss. I felt like a balloon that exploded and suddenly went limp. I was switching back and forth between these extremely high and extremely depressed emotions, which exhausted all my energy.
In fact, the biggest risk in trading is not the failure of your skills, but the loss of control of human nature.
When you trade frequently, your whole attention is focused on the market, and your emotions will be carried away by the market. The market will make you cry, make you laugh, and make you lose control, just like a gambler who has lost all his money and will not stop until his position is blown up. This is the magic of the market.
Therefore, the only way to prevent yourself from losing control is to not trade frequently and not become a slave to the market.
So how should we do frequent short-term trading?
You can do short-term trading, but you must control the frequency and keep a distance from the market.
There is a common phenomenon in trading that novices prefer short-term trading because short-term trading has a high frequency, short holding time, does not require long-term waiting, and does not test patience. In fact, I understand this eagerness to know the results, because human nature is eager for quick success.
But if you really want to do a good job in trading, you still need to control a certain frequency. For example, if you are a full-time trader, then the trading frequency per day should be controlled within 5 times. Trade fixed products to ensure that you can operate with ease without being flustered.
If you are a part-time trader, you can limit your trading frequency to 1-2 times a day. This way you don’t have to watch the market too frequently and can balance your life.
When you keep a certain distance from the market and transactions, you will find that the sky is bluer and the air is sweeter. You will no longer feel suffocated by the market. You will have sufficient brain capacity to think and stay rational.
In addition, you still have to have your own trading rules when doing trading.
For example, a complete short-term trading system has complete details, clear standards, and strict capital management rules, so that even if you trade frequently, you can follow your own rules. Of course, this also requires strong self-control.
Finally, I would like to remind you that you must pay attention to your transaction costs when trading.
I myself was once a victim of frequent trading. I cannot say that frequent trading is fatal, but it is true that frequent trading is difficult to make a profit. Even though I have been trading for more than ten years now, my mentality and finances are relatively stable. If I were to go back to the state of frequent trading, I might still not be able to control myself, because human nature is too difficult to overcome.
Finally, the purpose of our trading is to make money, not to satisfy our addiction to trading. Don’t become a slave to your own desires.
