The Four Principles of Trading, a Must-Read for Beginners!

1. About Entry

Entry is a trial-and-error process; no entry can guarantee 100% of what happens next. Entry is not everything in trading; it is merely the beginning of trading.

Seeking the perfect entry is the greatest trap in trading. Only by overcoming this hurdle can one truly begin to think about what trading is. Only then can one genuinely engage in the subsequent stages.

2. About Stop Loss

Stop loss must be decisive and resolute; this is the introductory lesson in trading. Risk trading requires controlling risk. The ability to actively cut losses puts the control of the account's survival in your hands. This allows for the opportunity to continue moving forward in an uncertain market.

3. About Take Profit

Take profit must attempt to let go of the profit side as much as possible. If you can’t let go of the profit side and can’t withstand drawdowns, you will always only earn small amounts and will never capture trending markets, even losing the cost of trial and error.

In trading, losses must be actively controlled by oneself, while the ability to profit depends on uncertain trends. Therefore, trading requires actively cutting losses and letting profits run. Only in this way can one accumulate advantages and achieve positive returns.

4. About Trends

Market conditions are uncertain; therefore, the highs and lows of fluctuations and trends cannot be predicted. However, stubbornly enduring losses and taking profits too early makes it difficult to achieve controllable risk, whereas the trend mindset of cutting losses and letting profits run is feasible. Hence, in trading, a trend-oriented mindset is the viable hope for achieving profitability.