What is the core essence of trading?
First, uncertainty is the foundation for the existence of the market, and future market trends cannot be accurately predicted.
Second, the trend is chaotic, which requires traders to divide and define the chaotic trend, and then form deterministic rules to deal with uncertain trends with deterministic rules.
Third, what is a trend? This requires traders to define their own trends and use them as the basis for trial and error when opening positions. Breakthroughs can be trends, callbacks to support levels can be trends, double moving average crossovers can be trends, top-picking can be trends, and chasing ups and downs can also be trends.
Fourth, what is following the trend? Take a look at your trading account. If you make money, you follow the trend, and if you lose money, you go against the trend. This has nothing to do with the trend graph. Even if you are in a bullish trend, if the loss continues to expand, can you still say that you are following the trend? Since you follow the trend, why do you lose money?
Fifth, how to open a position? In fact, it doesn't matter how you open a position. What opening a position can determine is only the trading rhythm and trial and error efficiency, but it cannot determine whether you can make money. Even if you toss a coin to decide whether to go long or short, you may make money. Is your method worse than tossing a coin to decide whether to go long or short?
Sixth, no trading method can produce an advantage in terms of the winning rate of opening a position. Under a one-to-one profit and loss ratio, the winning rate after the law of large numbers takes effect will be infinitely close to 50%. Many traders have long focused on opening positions, but the core of making money is not here.
Seventh, what is the core of making money? It is to create a high profit and loss ratio through the closing logic of cutting losses and letting profits run. This is the only source of advantage.
Eighth, there are two core purposes of position management: one is to protect the principal, and the other is to make more money when making money and lose less money when losing money.
