The biggest change from loss to profit for me was not how much my technical skills improved, but rather the significant change in my understanding of trading.
In the past, I believed the main reason for losses was poor technical skills, so I searched for the perfect methods and systems. Eventually, I discovered that there is no perfect system; sticking to a system that yields positive results is what matters.
I always liked to predict the market, analyzing where the highs and lows were, drawing lines every day, and looking at various reports. The result was that I was right twice and wrong eight times. I selectively forgot those eight mistakes and only remembered the two times I was right, which led to a bad habit of thinking I was always right, ultimately resulting in various losses. Later, I had an epiphany and realized that the market can never be predicted; what I should do is follow it, not predict it.
My previous trading methods were very chaotic, with almost a dozen different strategies. Whenever one trading method lost money, I would switch to another, resulting in very few months of continuous profit for over three months throughout the entire year. This made me realize that to be profitable in trading, consistency is essential. The core of profitability is consistently executing a positive trading system.
Before, I always placed great importance on technical analysis, focusing all my energy on it and never really caring about money management. In the end, I discovered that technical analysis is the least important; without proper money management, no matter how good the technical analysis is, you will still lose money.
I once believed that the market was constantly changing, and using rigid methods for analysis would not yield profits. In the end, I found that the market is always changing, and you will always lag behind it; no one can predict the market. What you can do is to respond to changes with consistency; simply put, it’s about using one line to navigate through everything.
In the past, I wanted to profit from any market condition and didn’t want to miss out on anything. Because either it was a range or a trend, I would buy high and sell low during ranges, and go with the trend when it was trending. The result was various losses. Eventually, I returned to the vicious cycle of predicting market conditions; whether it was a range or a trend, I treated it as a trending market. I would accept losses in ranges and make profits in trends, avoiding losses in both ranges and trends.
I used to deny any indicators, believing that indicators must come after candlesticks are formed, and the analysis of the subject matter comes afterward. So, I was focused on low-K analysis. However, I encountered a problem: subjective trading, which is the main reason most people lose money. To be profitable, one must have trading rules; the biggest issue with subjective trading is that it cannot be quantified. Without quantification, consistent execution is impossible, leading to losses. No matter how I analyzed moving averages, it was useless; if I saw a bullish moving average, I would turn bearish, which is part of my rules. If I used lock orders, I would feel good in the morning and go long, but if news came out in the afternoon, I would immediately go short, changing my mind back and forth. Such thinking is destined for failure.
The function of indicators has never been to predict market conditions, but rather to serve as a tool for setting rules for oneself.
The above are some changes in my understanding from losses to profits, and there are still some that I haven’t thought of yet. These insights were gained through my personal experience and investment in the market. If you can’t understand them now, that’s okay; save them, and I believe that one day you will understand.
