Whether you can accurately grasp market fluctuations and create long-term wealth is not a matter of talent; fundamentally, it is an essential ability to work in the field of speculation.
Making one or two successful trades does not mean success in your career; anyone can do it at any time, this is not an industry where one becomes wealthy by luck. The goal of speculation is to continually do the right thing, not to take shortcuts. You should not feel frustrated by recent losses, nor should you become complacent just because you have won two trades in a row. My interest in the art of trading far exceeds my interest in the most recent trades. Everyone can nail a few nails into the board, but that does not mean they can build a house. To build a good house, you need not only skills and plans but also the confidence to carry out the plans and the ability to work every day regardless of the weather.
What is speculation
Speculation is the art of identifying potential future trends. It is very difficult to accurately predict or foresee what will happen in the future or how it will happen. However, all investment predictions involve three elements: the choice of prediction, timing, and management. Mastering just one of these is not enough; you must thoroughly understand and be familiar with all three elements. Therefore, let us study these elements one by one. The choice has two aspects: one is
Choose markets that are about to start fluctuating.
Firstly, choose a market where you can concentrate your attention. Do not expect that just because you are trading in a certain market that your favorite market will soar, filling your pockets. By studying the candlestick charts of stocks or commodity futures, you can discover an astonishing secret that differentiates you, me, and potential speculators. This secret tells us that price tends to fluctuate within a certain range, often leaning towards one side, thus vaguely presenting some kind of trend. There are only 3 to 4 opportunities a year when prices suddenly undergo significant changes, and you can profit from these opportunities.
If you try to look at the charts, you will see and understand that significant price changes do not occur every day. In fact, the probability of a significant change is greater than the probability of no change... Major changes are exceptions rather than the norm. This is why choice is important. Would you prefer to get stuck in a volatile and directionless quagmire? It will exhaust you or completely eliminate you from the market. In either case, you lose; it's either losing money or losing time. Therefore, it is very important to understand when the market conditions are ripe for a price surge.
Considerations regarding market conditions include monthly trading days, weekly trading days, holidays, and internal market correlations, etc. Additionally, there are factors like the net long and short positions of the most active (and smartest) traders, errors in positions that the general investing public cannot avoid, and even major news that affects the market. Successful speculators know how to wait patiently, while the average person cannot resist and prefers to jump in and gamble as quickly as possible. At this time, speculation experts will wait patiently because they know that only when the key finds the right lock will it work, meaning only then will there be profits. The reason choice is so important for profits is another reason. When I trade in only one or two markets, I always achieve the best performance. Excluding all other distracting markets allows me to focus on the operations of my chosen markets, what factors affect them, or more importantly, which factors do not affect them. If you do not invest skills, passion, and action into your career, you will not achieve significant success; this is no exception in this field. The more you focus on your work, the more success you will achieve.
This concept aligns very well with the state of the industry. Enthusiastic professionals can earn more money than the average participant. In today's complex situation, specialization can yield significant returns. Many years ago, I heard about a smart person who made several million dollars in the stock market. He lived in the mountains of Northern California and made about three calls a year to his broker, only buying or selling the same stock. His broker told me that this person really only relied on that one stock and, through concentrated investment, made a large fortune.
the choice of timing
If you focus on specific commodity futures, and your new tools, techniques, and dreams tell you that a worthwhile trading opportunity is about to arise, this does not mean it is time to rush in. The choice is about what is about to change; timing, on the other hand, is the second element of speculation, which involves when a real change will occur. Choosing the right timing means narrowing down to a more specific moment when the price just begins to change.
At this point, simple tools such as trend lines, price breakout, and patterns can be used. The importance of timing lies in allowing the market to prove itself and prepare for an explosive trend in the direction you have chosen. What does this mean? In a plan to go long, I can say: 'A price drop does not necessarily mean that an explosive upward trend is about to appear.' Quite the opposite, a price decrease may lead to another wave of decline.
This is the simple principle of Newton's law of 'a body in motion stays in motion.' Traders are always in conflict; we want to buy, and according to traditional logic, we should buy at the lowest price possible, but trend experts say not to buy what is falling! My advice is not to buy at the cheapest price; wait until the explosive trend begins to buy. Even in this case, you might not buy at the lowest price, but that is much better than getting trapped by a new low.
Control trading
The third level of speculation relates to how you manage your trades and invested capital. Traditional theory tells us not to make trades you cannot afford to lose. Perhaps that's true. But think about it; if your mindset is: 'If this were toy stocks, I guarantee you would play with them, and you might lose.' If this were real money, meaning money you cannot afford to lose, you would be much more cautious, and the chances of winning would be the same. Demand is not only the mother of invention but also the mother of speculation management. Trade management is more important than financial management because it relates to how long you want to stay in the trading arena and how much you want to earn. It is closely related to your emotions, which means you should not get carried away, overtrade, or trade too little. It represents doing the right thing in trading and controlling your emotions. Knowing how to trade does not mean knowing how to win money. The art of trading combines choice, entry techniques, and money management, all of which are fundamental principles that need to be adhered to. But super traders know better that only through management, by controlling or applying these techniques, can you maximize your profits.
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