Admitting loss is the first step to stable profit. In investment, the most annoying thing is probably loss. But not all losses are so hateful. Losses are divided into small losses and large losses, temporary losses and permanent losses. If you hate even small losses and temporary losses and are unwilling to face them, I am afraid that you will only have huge losses and the end of leaving the market forever. So what should be the attitude towards losses? How to deal with losses effectively? First of all, we need to understand what losses are? If you have a complete trading system, there are clear operating guidelines from direction, entry, stop profit and stop loss to fund management, and this system still has a probability advantage, then trading will become a simple repetition, repetition and repetition, forming a large number, and obtaining profits from high-probability trends on the basis of avoiding the risks of low-probability events. The probability advantage is brought by the large number of super-strong execution. From the perspective of each transaction alone, profits and losses are randomly distributed. There is nothing completely certain in this world, so we must face losses. Many people, including me in the early days, have a huge problem that small-probability losses cover large-probability profits. This is a mountain that traders must climb over. In fact, we are facing two unavoidable premises: 1. The final net win is the result of the superposition of profits and losses; 2. We cannot escape the probability of losses; these two premises can lead to a conclusion: less loss means more profit. Let me ask, how many times have we made a small amount of money (such as 20,000) with fear and caution the next day when we suffered a huge loss (such as 100,000) the day before, and then regretted why we didn't stop loss earlier in those transactions the day before to save 80,000. Losing 80,000 less yesterday is equivalent to making 80,000 more today, just a thought. Profits and losses are like sand in the upper and lower buckets of an hourglass. No one can do without the other, and they are a unity of contradictions. People's hearts are unpredictable, and the market with so many people participating is even more changeable. What happens in this market refreshes our cognition over and over again. Who would have thought that the contract would fall by 10%? Who would have thought that there would be several more 10% increases after a 10% drop? We must respect the market, just like fishermen respect the sea, and be prepared to face extreme changes at any time.Since trading is risky and we cannot guarantee what will happen next, there is no reason to let losses spread. Instead, we should accept and limit losses, and then accept the fact of temporary losses. Once again, we should strengthen a belief: losses are inevitable, they can only be limited and accepted calmly after they occur. They are the cost of making profits. We do not need to look down on ourselves when we make losses, just as we do not need to be overjoyed after making profits. This is just the probabilistic advantage at work. Admitting losses is the first step to turning to profits. Admitting losses is not admitting cowardice, but not admitting losses is reckless. Many people eventually lose money and exit the game not because they cannot make money when they make money, but because they do not admit losses when they lose money. Not admitting losses will bring many problems, each of which can kill you. If you do not admit losses when a small loss occurs, it may turn into a single big loss, and you will lose time and more confirmed trading opportunities in the process of holding on; if you do not admit losses after you have stopped losses, some people will trade frequently, digging a big hole little by little, and some people want to make up for the losses in one transaction, and let profits frequently turn into losses. It is not terrible to not stop loss for a single transaction, but it is terrible to not admit the loss and keep adding positions. Maybe you can get back many times, but if you can't get back once, it will definitely make you unforgettable. Therefore, small mistakes are not terrible, but what is terrible is knowing the mistakes but not correcting them, making mistakes on top of mistakes, and finally leading to big mistakes. A big loss in one day often affects a long period of time. If the loss amount of the day exceeds your tolerance limit, even people with good control will find it difficult to let go the next day, and it is often easy to make money the next day after you lose a lot of money. One in and one out, there is a big difference from normal trading. Therefore, we who do intraday trading all agree with one sentence: the key to long-term profit is not to lose too much when you should lose. This is also the reason why traders in the team are set with a maximum single-day loss. Many people understand these principles, but not many people can deal with losses correctly and firmly. In my opinion, there are three ways to deal with a single loss: logical stop loss, time stop loss, and fixed stop loss. Logical stop loss is to be consistent with the logic of entry. If multiple or one of the entry logics is reversed, stop loss should be stopped immediately;Time stop loss is a supplement to logical stop loss. If the logic has not changed, but the desired result has not yet arrived, it is likely that there are reverse factors that you have not discovered. Although you don't know what they are, you still have to deal with them. Some people say that this will miss the big market. I say that there is no end to making money. Avoiding risks and increasing certainty is above all else. Fixed stop loss is a fixed position or fixed loss point stop loss, which is used to save lives. The three are combined and applied, and whoever arrives first will be executed. As for the specific standards, it varies from person to person and from method to method. The maximum loss for a single day must be there. As for how much it is set to, it depends on your daily average profit, which is generally higher than the daily average profit, but lower than the maximum daily profit. Beginners should be stricter, the stricter the better, so that they can force themselves not to do it blindly, and in disguise expand their time tolerance and financial tolerance, so that they are not easily killed by the market, and it is easy to establish faith after starting to make money. The best way to retrace on the same day or for several consecutive days is to shrink or stop three times. What is the three shrinkage, that is, shrinking the order volume, shrinking the frequency, and shrinking the expectation. There are two reasons for continuous retracement: one is that the technique and volatility do not match; the other is that there is a problem with the mentality of execution; once the volatility characteristics are formed, don't expect it to change easily, not to mention the bad mentality. Which one is not worth shrinking or stopping? The purpose of shrinking or stopping is mostly to repair the mentality. People and the market are like husband and wife. After the loss, use a small order to make a more confirmed opportunity to make a little money and run away, just like after the husband and wife quarrel, the lover whispered sorry to you, and the mentality slowly eased. When encountering continuous retracements, instead of choosing to operate madly and lose money, you shrink three times and still believe that as long as you stop, the funds will sooner or later reach a new high. I call this state "confidence in adversity", which is the sign of a mature trader. In the process and after the process of gradually finding the rules that suit you, execution is the top priority. Many people fall here. Any decision, no matter how fast, has a brewing process; conversely, the more fully it is brewed, the more decisive it will be. Why are old drivers so responsive? In addition to being skilled, it is because they always have various plans in their minds.Before each transaction occurs, various plans should be made. What if it meets expectations? What if it exceeds expectations? What if it falls short of expectations? What if it is completely opposite? When the actual situation moves towards a plan, you must constantly tell yourself what to do. For example, after holding a loss, keep telling yourself that if a certain price is broken, you must close the position regardless of cost. If you really reach this position, you must be more decisive than those who are mentally prepared. I never think that trading is like art and can be done at will. Trading is rigorous. From the generation of expectations, the formation of a general structure, brewing, the maturity of trading opportunities, to entry, verification, adjustment, and processing, the market trend must fall into a rigorous logical framework step by step before trading will occur. "The Art of War" says, "A defeated army fights first and then seeks victory, and a victorious army wins first and then seeks battle." I will ask myself ten questions before trading, in order to control my hands and increase the relative certainty of trading. No matter how high the certainty is, losses cannot be avoided. Accept single losses, accept losses on the day, accept a stage of retracement, and then reflect and summarize, regroup, and don't let mistakes happen again. If we are unhappy just because of a loss, wouldn't it go against the original intention of entering this market? One day's profit and loss can't change anything, but continuing to do the right thing at least means that I can partially control my own destiny, and then influence others, which is meaningful. Don't act rashly because of a small profit, and don't be deformed by profit and loss. Encourage each other.
