Throughout my trading career, I have repeatedly pondered a question: what is the fundamental difference between top trading experts and the masses?
Is it because they are more diligent? Or because they work harder?
But this doesn't make sense, because so many traders have put in all their effort yet remain sluggish, and so many people who have immersed themselves in the world of candlesticks for decades still cannot rise majestically.
I kept thinking about this question until a certain period when I found that some people with formal backgrounds got trapped in the analytical illusion they were proud of. I found that some trading veterans immersed themselves in their information world every day. I realized that those obvious, seemingly self-evident basic principles of speculation could lead different people to have different observations and thoughts, resulting in various outcomes. I suddenly understood that in the world of trading, it has nothing to do with effort, education, or experience.
Understanding is the only gap.
1. There is no knowing is easy and doing is hard, only unawareness.
In the field of trading, many traders explain their insufficient execution ability with a phrase: knowing is easy and doing is hard. But in reality, these four words are meaningless in the world of trading.
In speculative trading, there is no knowing is easy and doing is hard. The difficulty in doing it is fundamentally due to not knowing.
For example, many people know that smoking is harmful to health, so why don’t they quit? Because their understanding of the harm in the word 'harm' is insufficient.
For example, I smoke, and I have tried to quit smoking but ultimately failed. I have examined my heart multiple times to find reasons for my failure: is it due to my execution ability? Is it because my ability to resist temptation is lacking? I don't think so, because in certain areas, I can demonstrate execution ability far beyond others.
What is the reason for this? I kept thinking about this question until one day, I suddenly realized the fundamental reason: because of understanding.
I ask myself, my true understanding of smoking is: it is indeed harmful to health, but the degree of harm is limited. Among so many smokers around me, I have never seen anyone have an accident because of smoking, and smoking is one of the few methods left for me to suggest to myself that I am relaxed...
The reason I cannot quit smoking is that in my shallow and limited understanding, I believe smoking is beneficial to me, but
The benefits afterward outweigh the harms. So I cannot change my perception; it is meaningless for you to force me to quit smoking.
I can ultimately think of a way to find one and light it up.
However, what if one day I fall ill because of smoking and face life-threatening situations? Undoubtedly, I will stand firm.
In other words, quitting smoking. My execution ability will be stronger than anyone else's.
Because my understanding has undergone a complete transformation, there is no need for any coercive means.
Therefore, there is no such thing as knowing is easy and doing is hard; it only exists in the form of insufficient understanding. Changing behavior and changing trading patterns are both due to this.
The most fundamental aspect is to change your understanding and your view on the pros and cons of the trading factors involved.
2. Cognition with action is true cognition!
Perhaps the most common is stop-loss; undoubtedly, stop-loss is the most fundamental trading skill. To many outsiders,
Stop-loss can be wrong. They would say: losses are all due to stop-loss.
In my trading career, those true trading experts I have seen are decisive individuals when it comes to stop-loss. They act swiftly without hesitation.
Why do they do this? What supports their decisiveness? It is understanding.
Many traders think they understand the principle of stop-loss, but in reality, countless people hesitate at the moment of stop-loss.
when it truly comes time to act, they start to hesitate, countless images flash through their minds, and various emotions arise within them:
Why stop-loss? What if the market improves after the stop-loss?
This market is meant to wash me out; I must hold on!
Stop-loss is indeed correct, but this time, I am fully confident that the market will turn around!
This stop-loss position is not good; I need to change the stop-loss position!
Today's market is a panic market; I cannot be panicked out.
At the moment when a trader needs to stop-loss, they have countless reasons to pre-determine their decision; the reasons are varied, yet the fundamental reason behind them is actually just one point:
He believes that he will incur losses from his stop-loss.
It should be known that speculative trading is about one's fundamental interests, and human instinct is to seek benefits and avoid harm; we will always do so.
To make choices that one believes are 'most beneficial' to oneself based on their understanding. So, when it truly comes to real interests,
At critical moments, true understanding will definitely be reflected; the support that helps him make decisions at that moment is his fundamental understanding.
This is the fundamental error of knowing is easy and doing is hard. Many people believe they know but cannot do it; that is because of your understanding.
my understanding has not reached the level where it can dominate your behavior.
In fact, I have emphasized that although stop-loss consists of only two characters, these two characters hide at least countless layers of understanding, which can be roughly divided into the following seven layers:
01 Not understanding why to stop-loss
02 Recognize stop-loss
03 Strive to avoid stop-loss
04 Acknowledge the reasonableness of stop-loss
05 Understanding the origin of profits and losses
06 Unconditional stop-loss
07 Embrace stop-loss
A trader thinks he really understands stop-loss, but in reality, he may only be at the second level.
His understanding may be at a very superficial level.
And those who can truly achieve unconditional stop-loss? They must have an absolute understanding of stop-loss. They are battle-hardened individuals who have experienced the various pains brought by not stopping losses, placing the importance of stop-loss at the top of their trading priorities. What will they think at the moment the price touches the stop-loss?
What comes to mind is: stop-loss.
They will not have any thoughts of locking positions, intervening, or not stopping losses. Because they know that at that moment, stop-loss is the perfect choice. Therefore, they can be resolute and calm.
True trading experts have no magical or exclusive secrets; they have merely forged high-level trading awareness through endless experiences.
3. The threshold for trading has always been understanding and execution.
Correct trading behavior cannot be achieved due to insufficient understanding. Inconsistency in executing the trading system is due to insufficient understanding, stubbornness is due to insufficient understanding, over-leveraging is due to insufficient understanding, and all-in bets lead to changing trading rules.
Changing plans is all due to insufficient understanding. It is your understanding of risk, your understanding of trading logic, your understanding of candlesticks, and your understanding of the fundamental sources of profit that lead to all these erroneous behaviors.
The basic principles of speculation have long been established; all we need to do is understand and execute. The threshold for trading has never been about the depth of knowledge, the precision of analysis, or how long you've been trading.
The threshold for trading has always been understanding and execution.
The king of speculation, Jesse Livermore said: speculation is as ancient as mountains, there is nothing new on Wall Street.
The basic principles of trading are those principles that seem to be known by everyone, but the degree to which each person 'knows' is different. Because the understanding behind these principles is divided into multiple levels, and the logic behind these principles is interconnected.
To grasp the overall situation, you need to have sufficient insight. Therefore, it is said that the gap between ordinary traders and top traders has always been the depth of understanding of each segment of trading rather than breadth.
You gain insight into the truth of speculative trading, truly understand every aspect of trading, and prioritize their importance to truly master speculation.
Help speculative traders gain insight into the truth of speculation, allowing them to truly understand why to stop-loss, why to manage funds, why to generate trading rules, why to have trading logic, and why to establish a complete futures trading system...
A complete futures trading system...
Through these links, break through cognitive barriers, enhance true understanding of speculation, and thus change their trading behavior.
For.
4. Gain insight into the truth of speculative trading.
This column requires your patience to read; if you look at the system like I did the first time I saw a turtle.
I can responsibly tell you: it is meaningless, because you cannot master it at all.
The turtle trading rules consist of just a few lines of code, yet it takes a book's worth of space to elaborate on each link. Why? Because behind each seemingly simple link, there are countless complex logical connections and endless trade-offs.
The appearance of a trading system may seem simple, but internally each link is interconnected. Without the previous understanding links as a foundation, and without understanding the specific logic within, your understanding of the trading system will belong to the most basic level, with no possibility of mastery.
If you can master all the key points of understanding in this column, you will be able to master all types of speculative trading systems.