Five Insights on Trading

During the trading process, I have gained many profound experiences and summarized five insights:

1. Simplify the trading process: Many traders tend to overtrade, constantly analyzing the market, interpreting various indicators, and frequently making trades. In fact, one should learn to relax appropriately; there are not many truly useful trading signals in the market, and most are just noise. One should be patient like successful hedge fund traders and filter out valuable signals, steering clear of uncertain and ambiguous trading opportunities to avoid overtrading.

2. Plan an exit strategy before entering a trade: Traders must establish their own rules and take responsibility for their trading actions. Timing the exit is more critical than entering; many people exit trades arbitrarily, resulting in minimal profits or significant losses. By setting a strict take-profit and stop-loss plan in advance, one can maintain a calmer mindset during trading, reducing emotional interference in trading decisions and making trading more rational.

3. Reject worthless trades: Trades where the risk does not correlate with the profit are often the result of blind and frequent actions, leading to a vicious cycle of losses. Traders who enter blindly often have a lucky mindset and do not pay attention to risks. In contrast, professional traders plan ahead; worthless trades reflect a trader's lack of understanding and hasty decisions, which do not benefit personal trading skill improvement and should be avoided.

4. Maintain a high level of discipline: Discipline is crucial for trading success; it means strictly adhering to trading rules and principles, managing risk effectively, achieving trading goals, and avoiding emotional influence. I spend only half an hour a day analyzing charts and recommend that everyone strictly execute their plans without being distracted by short-term market fluctuations, as this will improve trading efficiency and stability.

5. Keep a reasonable distance from the trading market: Maintaining a certain distance from the market is a wise approach, as overtrading can easily lead to financial losses. Analyzing market trends with a longer time frame, with daily charts being a good choice for technical analysis, can help us eliminate some short-term distractions and more effectively identify trading opportunities, allowing us to make more rational decisions in trading.

The path of trading is not easy, but keep these insights in mind.