To be precise, the trading behavior of winners is anti-human, while the trading behavior of losers is in line with human nature.
1. Following human nature and going against human nature
Human nature likes certainty.
Losers who follow human nature will try various methods to predict future trends and find a way to enter the market with a high winning rate.
The anti-human winners realize that the trend is uncertain and entering the market is just the beginning of trial and error.
Human nature doesn't like losses.
Losers who follow human nature will not cut their positions and accept losses after suffering losses. Instead, they will choose to fight to the end with losses, increase their positions due to floating losses, and allow losses to continue to magnify, and sometimes they will be swept away by a wave.
The anti-human winners are those who strictly set stop loss. Every order must have a stop loss, and they will stop loss immediately and never fight to the end.
Human nature is greedy and fearful.
Losers who follow human nature will be afraid that the profits will fly away when they are holding profitable positions, so they will choose to run with the profits. When the transaction goes smoothly, they will blindly increase their positions in order to make more money.
The winners who go against human nature are those who can hold on to their orders, follow the trend, and let the profits run. Each transaction is independent, and they will not blindly increase their positions just because of how much money they made previously.
Trading is actually a war with your own human nature. If you can overcome your own human weaknesses and take the initiative to go against human nature, you can surpass most people and become one of the few who make money.
2. So how to go against human nature?
Many people get nervous when trading. Fundamentally, it's because human nature doesn't like uncertainty, and you're afraid of losses and drawdowns. So how do you solve this? You need to be frank and honest, and not afraid of losses or profit taking.
There is only one way to solve the problem, which is to solve it from a cognitive level. You need to understand that trends are uncertain and you cannot control them. What you need to understand is the higher-dimensional certainty under uncertainty: all transactions are trial and error. You must know that trends are uncertain and you cannot control them.
You also have to understand that since trading is trial and error, I can only control the loss limit of each order, so I have to bring controllable risks to every transaction. Finally, I also have to understand my trading method, and long-term execution will definitely usher in my own harvest period.
3. What kind of trading system is anti-human?
Trend following is an anti-human trading system.
In fact, the trading model that is opposite to the trading logic of most people is very simple, which is to cut losses and let profits run.
Many people often see this sentence and think that many people do this. In fact, on the contrary, there are very few people who can always maintain this logic.
Because cutting losses and letting profits run goes against two important human natures: aversion to losses and aversion to uncertainty.
Most people are very reluctant to stop loss when trading, because once a stop loss is made, it means the loss is certain. Most people also like to lock in profits and take them as soon as they see benefits, because they are worried about the loss of profits.
So from the perspective of anti-human nature, we only need to cut losses and let profits run, and you will be halfway successful.
4. Trading acumen.
If you want to be a successful trader, you must have insight into the truth of trading, in this environment full of uncertainty and the long-standing existence of various erroneous theories, you must have insight into the truth behind it.
If a trader wants to be successful, he does need certain qualities to get rid of the fog and see the light as quickly as possible.
For the same theory, some people can understand it in a few days and see the truth behind it, but some people need two or three years to truly understand it. The fate of these two types of people is destined to be different.
Most people have been immersed in illusions and fog throughout their trading careers. They feel that the market is predictable and try to find various rules and the holy grail of trading to defeat the market once and for all. As a result, they have wasted too many years of their youth and even invested a lot of real money, making themselves heavily in debt for life.
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