You need to use probabilistic thinking when speculating in currencies and stocks. This is almost the consensus and secret of success among the world's top traders. The so-called probabilistic thinking means that price fluctuations themselves are extremely random and unpredictable.
Professor Van K. Tharp, the author of "The Road to Freedom in the Financial Kingdom", wrote about an experiment conducted by a friend of his. He used random market entry to compare with those classic and famous market entry indicators. After several years, the returns were not inferior. The so-called random entry into the market is like tossing a coin. If it's heads, go long, and if it's tails, go short. Gain profits through money management, that is, risk management.
Risk management, that is, for example, strictly limit the maximum loss to 1.5% for each intervention. Once triggered, run immediately. If it is not triggered, "mistake", increase the position and raise the stop loss level.
Probabilistic thinking is that if I "get it wrong ten times" like this, if I get it wrong seven times, the loss will be 10.5% of the total capital. Once I get it right once and the profit exceeds 12%, I will wipe out all the previous losses and still make a profit. Of course, the one is slightly better. The trend is certainly far more profitable than a dozen points.
In gambling terms, it means winning and losing.
The essence of speculative market is gambling. Fund management is a means to obtain "high odds". Market entry skills are actually not that important. The random market entry experiment of Professor Tharp's friend has proved it.
