I think trading is divided into two levels, one is the trading of large funds (you can imagine how large this fund is), and the other is the trading of small and medium funds. The strategic focus of these two types of trading is different due to the relationship between funds. For large funds, technical aspects have almost no effect. They pay more attention to the general trend of the international and domestic economy, and can even create momentum, thereby turning the tide in the market. For example, Soros and his ilk. For small and medium funds, because the funds are not so large, they should adopt a strategy of following the trend, rather than focusing on how to create momentum. My trading method belongs to the method of small and medium funds, which must be mentioned first. (My understanding is that large funds can create and use fluctuations, while small funds must follow fluctuations (trends).)
Into the title!
Let's first explain whether trading can be taught. Let's define the meaning of teaching. Teaching means that you can see immediate results after being taught the skills.
Dennis seems to have given us an answer to this question, the famous turtles. In fact, after careful analysis, we find that not all turtles are successful, especially after leaving Dennis. So trading cannot be taught. What can be taught is only knowledge. If you want to implement it in trading, you still have to make personal efforts to understand and digest the knowledge you have learned, and deeply agree with it in your mind. Otherwise, you are still the same person. Of course, there is still a way to achieve quick success, that is, on the premise of fully trusting a person and fully accepting his trading ideas, conduct supervised intensive training for half a year to a year. After that, make personal efforts to fully understand and accept this trading idea. This can be achieved quickly. In the final analysis, it is also Dennis's method.
So trading cannot be taught, but the time to success can be shortened.
So what can you learn here? Just some knowledge about the essence of trading. As for whether it will become a tool to create profits for you, it depends on whether you can understand it deeply and integrate knowledge with practice.
Next, let’s talk about trading.
There are only eight words to describe the way of trading: survival first, make big profits and lose small!
If you understand these eight words, you will understand the essence of trading.
First analyze survival first
Everyone enters this market to make money, except for those who have too much money or are just playing for fun. Then you have to consider the issue of sustainable development. If you are smart enough to just come in and play once, and leave when you make money or lose money, you don’t have to worry about the issue of survival. In other words, we enter the market to fight a protracted battle, not a single battle. The battle cannot focus on the gains and losses of a moment or a place, but only needs to win in the end. Here you can refer to Sun Tzu's Art of War: "A good warrior is not ashamed to run away. In the past, a good warrior first made himself invincible, waiting for the enemy to be defeated. The invincibility lies in oneself, and the victory lies in the enemy..." and recite it more and more, and understand it deeply. Considering from the perspective of human nature again, why is the survival first link always ignored in practice? The reasons are as follows:
First: Human nature causes people to always be eager to get rich, and it would be even better if they could get rich overnight.
Because of this mentality of being eager to get rich, people hold heavy positions and make frequent transactions.
Heavy positions will lead to two results: one is a big profit, because thoughts guide behavior, behavior becomes habit, and habit determines fate, so the next time you will still hold a heavy position, and the final result will definitely be back to the starting point. So the previous big profit is actually a trap. It's just a sweet temptation, because the idea of heavy positions in your mind will lead you to die in this market, sooner or later. The other is a big loss, which we can consider from a mathematical perspective.
A loss of 5% requires a profit of 5.26% to break even later
A loss of 10% requires a profit of 11.11% to break even later
A loss of 20% requires a profit of 25.00% to break even later
A loss of 30% requires a profit of 42.86% to break even later
A loss of 40% requires a profit of 66.67% to break even later
A loss of 50% requires a profit of 100% to break even later
Loss of 60%, a profit of 150% is required to break even later
A loss of 70% requires a profit of 233.33% to break even later
Okay, I won’t continue listing them. If you are interested, you can calculate it yourself. A big loss can significantly reduce your principal.
Therefore, the harm of heavy holdings can be concluded here. If you like heavy holdings, you have almost sentenced yourself to death.
The second is frequent trading. Most people in the current futures market are doing intraday trading. It is not that intraday trading is bad. As the saying goes, all roads lead to Rome. First of all, you have to ask yourself, are you suitable for intraday trading? If you don’t have that ability, you should practice your skills first. In an impetuous society, it is in line with human nature. People instinctively like to trade frequently. With the help of the market and society, it is even more appropriate!
The transaction cycle is short and the accounting is good. If it is 1% per day, the monthly profit can reach 20%. Haha, I met such a guy. He is very good at accounting, but it's a pity!
First, calculate the handling fee. Frequent trading fees will eat up a large part of the profit. In addition, the cycle is short, and the profit is not large. If you add the level of your ability, you will make more mistakes than correct ones, then you will only wait for death. To do intraday trading, you need iron discipline, strong nerves, and a proven system or market sense.
So what should we do if we can neither hold a large position nor trade frequently?
In fact, this involves the issue of fund management, which means that first you must have a concept of bankruptcy rate in your mind.
The concept of bankruptcy rate involves winning rate and odds. This will be discussed later.
The most important addition:
People don’t resist change, but they resist being changed!
Everyone is guarding a door that opens from the inside. No matter how hard others try or how hard they push, they cannot open the door for you. The driving force for change comes from everyone's heart.
Thoughts guide your behavior, even though you may not realize it. Repeating behavior day after day will form habits. Habits are the key to destiny. Habits are your slaves, which can help you shape yourself, or they can become your masters, making you driven by habits. When multiple habits are concentrated on you, they will become your character in the eyes of others, and your character will determine your destiny. So destiny is determined by me, not by God. First of all, we must have an open mind, accept, tolerate, and think, so as to correct the root, that is, the concept. After the concept is correct, everything else can appear naturally. Otherwise, it will be like water without a source, and giving up is a matter of time.
The fate of the transaction is in your own hands. First of all, you must have a correct concept of trading.
Next, we will analyze a very important concept in trading, which is also a concept that many people are still confused about.
You will have a basic understanding of casinos and lotteries. The concept of probability is still vague in most people's minds.
Next, change the rules again. In the above, Party A wins 1 yuan and loses 0.95 yuan. With a capital of 1,000 yuan and a winning rate of 50%, it is certain to win. Change the rules again, follow rule 2, and keep the rest the same. Each time you bet 500 yuan, Party A wins 500 yuan and loses 475 yuan. Party B wins 475 yuan and loses 500 yuan. Does Party A still feel that he has a sure win this time? If not, why not? Don't think I am asking too much. Please think more about the above example. The way of trading is there.
This time, Party A no longer has the feeling that he has won, because one thousand yuan is only enough to bet twice. The winning rate and odds have not changed, but the feeling of winning is gone. This statement is a bit long-winded. Consider the issue of winning rate and odds mentioned above.
So from this we can see that you have a system with a 50% winning rate and the odds are in your favor, but you don’t manage your funds well, and in the end you still end up with zero.
(Why do you need to keep a light position in futures trading? It is to ensure that you have enough capital to make a comeback in unfavorable situations.)
I would like to ask you, if a system has a winning rate of only 30%, but the odds can reach 1 to 3, what do you think? I would say that this is a good system. Why? Look carefully at the analysis; 10 times is a trading cycle, each time you make 3, and lose 1.
10 times all losses, loss 10
9 losses, 1 win, 6 losses
8 losses, 2 correct, 2 losses
7 losses, 3 wins, 2 wins (please note that this is the case with a 30% winning rate and a payout of 3 to 1)
6 losses, 4 wins, 6 wins
5 losses, 5 wins, 10 wins
4 losses, 6 wins, 14 wins
3 losses, 7 wins, 18 wins
2 losses, 8 wins, 22 wins
1 loss, 9 wins, 26 wins
10 correct answers, earn 30
Therefore, do you still think that the key to making money lies in the accuracy rate? Do you understand why the masters of making money can often make mistakes, but their accounts are still making money in the end? Do you understand why Dennis said that 95% of my trades lose money, and only 5% of the trades make money, but I can still make such a big profit? So, should you change the standard of the masters you admire? People are often attracted to things that don't work, and some people specifically provide you with these things. Can you blame him for deceiving you? No, you are just blind! The key to implementing the above system is to do a good job of fund management, because even if you have a system with a 70% winning rate, you are likely to encounter a situation where 30% of the failed trades appear first. At this time, if you can't do a good job of fund management, then the 70% profitable trades in the later period will have nothing to do with you, because you have already blown up your account or lost everything.
Secondly, we need to analyze another major bias in human nature that hinders trading: people tend to be conservative when faced with benefits, and aggressive when faced with risks. This is a bias in human nature, and it is also the second root cause of the failure of most people in the market. The first one has already been mentioned, that is, being too eager to get rich.
Regarding this point, you can refer to Shapiro's experiment or behavioral psychology.
Specifically, in trading, if you enter the market in the right direction and have a floating profit, then the human reaction is to take a loss and be content, and the decision made is a conservative reaction when facing interests. If you enter the market in the wrong direction and have a small floating loss, then the human reaction is to take a gamble, hoping that you can turn defeat into victory in the later stage. Statistics show that in 80% of cases, you can survive to turn defeat into victory, but it is the 20% that go in the opposite direction and never look back, which makes this market have a few more losers. In layman's terms, the above phenomenon is: eat like a sparrow, poop like an elephant! So look at your own transactions, is it as mentioned above, making big profits and small losses, or losing big and making small profits. After that, you will know where you should work hard.
I have not elaborated on this issue of making big profits and small losses, but that does not mean it is not important. I have left the clues in here, and those who are interested can study it themselves.
The way of trading: Survival comes first, make big profits and small losses! This is like the inner strength in martial arts. With this inner strength, I cannot guarantee that you will make a lot of money, but I can guarantee that you are on the right path!
How to make big profits and small losses?
It seems that this issue will continue.
First, without increasing or decreasing positions, you should decide based on the winning rate of your own system. For example, if the winning rate of your system is 30%, then if you want to make money, your odds must reach 1 to 3. Specifically, if you lose an average of one dollar when you enter the market, then you must earn an average of three dollars. However, if you are very skilled and the winning rate of your system is 70%, then 1 to 1 is also acceptable.
Secondly, if you operate according to the daily level, that is, operate in the medium and long term, then it involves the issue of adding positions when the trend continues. The essence of this time is: if you lose, you will lose a small stop loss for a small position, but once the direction is right, you will make a big profit for a large position. So you can think about it, when you make money, your position is larger than when you lose, and if the magnitude of the profit is larger than the magnitude of the loss, then profit is inevitable, right?
Of course, the skills of adding positions belong to the level of method and technique. First of all, you must understand that making big profits and small losses is a must.
The first good thing about doing all of the above is that you will naturally be able to stop losses quickly, because you know that you can't rely on luck and let your account suffer a big loss. At the same time, if you don't stop losses, you are likely to lose more and gain less. The second point is to overcome the problem of adding positions after losses. Look at the big losses in the history of speculation. They all did not leave even when they suffered small losses, but instead added positions against the trend to spread out the losses.
Trading is a circular structure. What market to trade, what product to trade, how much to trade, where to trade, where to stop loss, where to add positions, where to exit, any mistake in any link will lead to the failure of the entire transaction. Stop loss is only one aspect. There are many people in the market who have done a good job of stop loss, but they also left the market in the end. Stop loss is just to limit losses!
When trading, you only need to remember four rates, which are: winning rate, odds, bankruptcy rate, and discipline.
Let's talk about the most important thing, first.
Winning rate, no one can achieve 100% winning rate, this must be determined first. Winning rate has two contradictory sides. If the winning rate is high, then the profit will be small, which is contradictory to the previous point of making big profits and small losses. Low winning rate is only one aspect of the previous stop loss. There are many people in the market who have done a good job of stop loss, but finally left the market sadly. Stop loss is just to limit losses! Contradictory. So what kind of winning rate do you think is the best balance?
Let’s talk about discipline. When talking about discipline, we inevitably have to talk about personal trading systems.
What is a trading system? In simple terms, it means that you should carefully consider and verify how each link of the transaction should be operated, and extract the principles accordingly.
Therefore, the corresponding trading system first includes the principle of fund management. What fund management principle is used to determine the position each time you enter the market? This should be consistent and consistent.
After entering the market, the maximum loss determined according to the principle of fund management must first be determined with a clear stop loss position. Note that the stop loss position is not a range, but a certain point. Get out of the market immediately when the point is reached. Don't have any expectations or luck. (To do this, you must have enough confidence in the entire trading system, and always keep in mind the concept of making big profits and small losses)
With a stop loss position, if you are wrong, you can cut it off, and if you are right, you can continue to hold it. Holding is the management of positions. You should manage it according to your judgment of the nature of the market and the previous plan. If the market is a range fluctuation, should your plan have a corresponding stop profit position? Just stop profit in place. If the market is a trend, then you should plan to increase your position according to the trend standard. Where to increase your position? How to move the stop profit point, and how to exit once the trend shows a signal of trend change? These should be reflected in the previous plan.
If your trading system is made by yourself after thinking and verifying, then there are corresponding concepts to support why each link is done in this way. You are clear about the whole process and don't need to think about what to do at which point. Then can you definitely operate according to your principles at this time? Not necessarily. In the early stage, you will still have sudden ideas from time to time to do something that violates your principles, but you will often realize that it is wrong and correct it in time. The system principles are of great help in helping yourself to fight against emotions and operate rationally, and the operations are consistent before and after. Losses are expected, and profits depend on whether the market is in line with your principles. In other words, we don’t know how high the sky (profit) is, but we can control how thick the earth (loss) is. Therefore, the improvement of discipline is actually closely related to whether you have truly formed your own trading system!
Once the system is improved, corresponding discipline will emerge!
Remember what Livermore once said: Most people come to this market without thinking about learning. Even if you put how to trade in front of them, they are too lazy to look at it. They only pay attention to the open cards and news, and just want to follow the so-called masters to make a fortune. It is sad and pitiful to pin your fate on others! The greatest achievement of today's society is not the gorgeous material and advanced technology, but the realization of locking people in cages! The cage of thought. Most people are using their bodies to practice other people's ideas! Is the Turtle Trading Rules a secret? No, Dennis also said that even if I put the secret of how to trade in the newspaper, no one would follow it! People's minds hate simplicity and cannot tolerate simple truths! The more bizarre it is, the more people flock to it!
Correct a concept! Does trading require prediction? Does good trading require accurate prediction?
Trading requires a little bit of prediction, just a little bit. You can make money from trading without any prediction. Similarly, a person who makes accurate predictions may not make any money at all! Reality is so cruel!
I have said before that trading can be done randomly, in random directions, and still make money in the end. We need an idea and then use funds to verify our ideas. Prediction is just a small means to increase the chance of winning.
I mentioned earlier that I go from thick to thin. Lately, I feel that I am so thin in transactions that I even doubt whether I have lost something. If I want to prove something, I can only say a few dry sentences.
Most traders pursue a high-win system. In fact, they are instinctively pursuing a sense of security and certainty. People are very afraid of uncertainty, so they hope to see a clear sky. But the reality is that certainty will never appear, and uncertainty is the only truth. Change is the only constant. Only when you accept uncertainty can you feel a sense of security. Admit it, we can never predict the future. This world is nonlinear and uncertain! So, stop wasting your energy chasing gods and creating gods! #币安合约锦标赛
