About stable profitability

Some people say that to measure whether a trader is good is to see whether he can achieve stable profits.
I think this is too misleading.
Let’s add a time latitude to this sentence. In a short period of time, such as one year, if the market situation does not match your own trading system, then there is a high probability of a capital retracement, and it is normal to lose money for a year.
But if the time period is lengthened, such as 5 years, and the market can include both the unfavorable and favorable periods of the system, then it is also a high probability event that the average income will achieve positive growth.
Therefore, traders must have a clear understanding of their own systems, and must accept the control of losses during unfavorable periods and the release of profits during favorable periods. #交易策略

Trading is a risky game

The underlying logic of trading is risk control.
The result of a single transaction is uncertain, and the results of multiple transactions will approach the probability of the system.
But no matter how high the probability of the system is, it is still unavoidable to encounter low-probability events. In other words, low-probability itself is something that happens rarely but will definitely happen.
From another perspective, it can also be understood that when a small probability event is encountered in trading, losses are inevitable.
Furthermore, every time a transaction occurs, the only thing that can be controlled by an individual is how much he loses. Whether, when, and how much he makes a profit is beyond his control.
Based on the above, it can be said that risk control is everything in trading. It is necessary to dare to lose and not be afraid of losses, but also to control the extent of losses. The grasp of this balance will accompany a trader throughout his career. #交易策略

Technical analysis and surfing

Interpreting trends with technical analysis is a bit like surfing.
When surfing, as long as you step on the wave correctly, you don't need to know much about tides, resonance, fluid mechanics and other physics.
All you need to do is be able to sense when a wave rises and when it falls, and have the instinct and drive to make the right move at the right time.
The same goes for technical analysis. You only need to analyze the small trends in the current cycle, find the appropriate entry point and stop loss level, and then just follow the market. Stop the loss if it is wrong, and follow if it is right. There is no need to refer too much to the fundamentals. and human intervention.
The formation process of a trend starts from a small trend and gradually evolves into a big trend.
The so-called small waves to big waves. #交易策略

About false breakthroughs
As the number of market contract participants and quantitative traders increases, the competition for key points becomes more intense. The specific manifestation is that the number of false breakthroughs has increased significantly.
The number of stop losses using the trend following strategy increases, and the number of profits using the swing strategy increases.
Objectively speaking, if you want to seize the profits of the general trend, the price is small losses caused by frequent trial and error, and the price of multiple small profits is that it is difficult to get on the big trend when it comes.
Both have their own pros and cons. Which operating strategy is easier for you to accept, so traders should choose that one. After all, a strategy that often puts oneself into inner struggle cannot be sustained for a long time.
Once trading breaks away from consistency, it is impossible to make long-term profits. #交易策略

About stop loss range
The purpose of stop loss is to prevent reverse market fluctuations from causing a devastating blow to the account.
An excessively large stop loss range, such as 20%, is meaningless because you cannot afford to stop the loss a few times before the account returns to zero.
A stop loss that is too small, such as 1%, is meaningless because it cannot tolerate small fluctuations in the market and can easily result in losses.
From this point of view, stop loss must at least meet the two conditions of protecting the account and tolerating market fluctuations.
One possible way is to control the position. For example, if you use 20% of the position to make a single transaction with an initial stop loss of 10%, then the position risk is 2%. #交易策略

Following mechanical trading rules is the least bad trading strategy

In a complex market, it seems a bit silly to adopt a mechanical set of trading rules.
The so-called machinery is to ignore the news, ignore human judgment, adopt unchanged entry and exit rules, and stick to it for a long time.
This method is certainly not the best, but for individual traders, it is the least bad strategy.
In an unknown market, the less individuals decide, the more the market determines. However, personal thinking is very naive in front of the market, at least that's how I feel.
Another advantage of this method is that no matter what the market is like, no matter what the single profit or loss is, traders can gain a kind of inner peace. Peace creates objectivity and drives away anxiety. #交易策略

Is trading mentality important?

In trading, more people are obsessed with trading skills, that is, through various analyses, they can find entry positions with a higher winning rate.
At this stage, traders have understood that trading is an uncertain game and understand the importance of probability.
But if you say that mentality is more important than technology, many people still think it is a bit false.
Let’s take chess, which is also a game, as an explanation.
The rules of chess are very clear, and the skills learned by chess players are also similar. In theory, at least at the technical level, the difference in victory and defeat between chess players should not be too obvious, but in fact this is not the case. There are always very few masters.
Has the master mastered any chess technique secrets? No, it’s the master’s mentality that is more stable.
In fact, the same is true for trading. As long as there is consistent trading logic and positive expected returns, the rest of the competition is mentality. #交易策略

"Sell high and buy low" is just "chasing the rise and killing the fall" under different scales.

Some people say that selling high and buying low are masters, while those who chase the rise and kill the fall are leeks.
But essentially the two are the same, it's just that the scale of observation is different.
For example, we observe a period when the price rises from 10 yuan to 20 yuan. Traders enter the market when the price rises from 10 yuan to 12 yuan (chasing the increase), and exit when the price falls back from 20 yuan to 18 yuan (kill the decline). .
But from a large scale, entry at 12 yuan and exit at 18 yuan is a proper sell high and buy low.
In other words, the same behavior under different observation scales will lead to different conclusions. It's just that the order of magnitude of the observation scale is different.
In fact, there are more than just these two concepts. Many behaviors in trading have this attribute of unity of opposites, such as short-term and long-term, fear and greed, etc. We will talk about it later. #交易策略

About the Minimum Regret Strategy in Closing a Position (2)
As mentioned in the previous article, there are two contradictions between profit locking and profit maximization in selling.
Taking spot as an example, executing a single selling strategy (such as falling below a certain moving average, or early support, etc.) will make it easier to maximize profits when the market is highly consistent with our trading strategy.
However, implementing a diversified selling strategy (such as using moving averages, supports, retracement ratios, etc. together) and reducing part of the position if it meets a certain rule is more moderate. After giving up the pursuit of "absolute maximum profit" , thus obtaining the median profit (neither the maximum nor the minimum).
This is the minimum regret strategy.
But no matter which method, you will wait for the price to fall back to a certain extent to confirm the end of the market, and different methods just have different definitions of this "falling range". #交易策略

About the Minimum Regret Strategy in Closing a Position

When will a profitable order be issued? This is a question that has no standard answer but has to be considered.
I believe many people have heard the saying that the master can sell, so what does it mean to sell? Does selling at the highest point mean it must be great?
Taking spot as an example, let’s first talk about the purpose of selling.
Selling has at least two purposes, one is to lock in profits, and the other is to maximize profits.
After a small rise, if you sell too late, the price may return to the entry price, which means no profit is locked.
Exiting the market too early during a big rise means failing to maximize profits.
The magnitude of the market increase is uncertain. This is the contradiction and the fundamental reason why my friends find it difficult to sell.
There are many solutions. To put it simply, implement the regret minimization strategy. Let’s continue talking about #交易策略 in the next article.

Can you make good deals based on news?

It is undeniable that there is a certain positive correlation between the high volatility of the currency circle and the news, such as the recent sec news.
However, as an ordinary trader, his interpretation of the news is different, and the lag in getting the news determines that it is difficult to regard the news as an inevitable basis for operation.
Of course, in a single case, there are indeed many people who have made money from messages. What I am talking about is having reproducible and consistent operation logic.
In the long run, the probability of being harmed by the news is far greater than the probability of benefit.
Since the news hurts us more, and we are powerless to do anything about the news, the best way is not to use the news as the basis for our transactions.
What do you think? #交易策略

How to prevent invalid stop loss?

If a stop loss is set when going long, and the market loses money downwards, and then continues to rise, this kind of stop loss is an invalid stop loss.
I believe many friends have had this experience, so how do you deal with this situation?
First of all, we need to understand why we need to set a stop loss?
The purpose of stop loss is to avoid suffering a devastating blow when going in the wrong direction.
In other words, stop loss is to treat possible losses as real losses, and use small losses to avoid destruction. To simply understand, it is to buy insurance.
Going back to the original question, how to prevent invalid stop loss?
I personally feel that there is no need to take precautions. As long as it is within the tolerance of your own system, you should dare to embrace stop loss.
What do you think? #交易策略

Price is absolute, value is relative.

For example, when it comes to the value of the pie, people who are bullish may see it as 1 million, while people who are bullish may see it as worthless. This is normal.
But no matter what, the price of the pie has a unique number at the current moment.
Based on the immeasurability of value and the uniqueness of price, an interesting conclusion will be drawn.
Price is a consensus balance point among all market participants at the moment, which is a mutual compromise between long and short parties, a state of moderation.
Balance is the essence of price. #交易策略

Will hard work always pay off in trading?

Let me talk about the results first, not necessarily.

If you pay, you will be rewarded, which belongs to linear thinking. Within the framework of a limited system, linear thinking or causal theory is established.
For example, student test scores generally have this characteristic, but in a complex system, such as trading, non-linear thinking, that is, probability is at work.
Often accepting uncertainty at the micro level will increase the probability of macro certainty, micro-macro swaps.
This is also what the Tao Te Ching says about right words and opposite words.
The reason for this may be that the environment we are in is neither completely linear nor completely nonlinear, but more like a chaotic state.
This is especially true in trading. Accepting a single uncertain result and controlling losses may be the whole point of trading. As for profits, just leave it to probability. #交易策略

True words are contrary, profits and losses are also contrary.

The essence of financial markets is the amplifier of human nature.
The purpose of everyone coming to this market is to make money. Whether you regard the market as a casino, a cash machine, or a way to prove yourself, it is inseparable from human nature.
If the true saying comes from the Tao Te Ching, it basically means that if you want to get something, you have to look in the opposite direction.
I think trading is like this. If you want to make money, you must work hard to control losses.
What do you think? Discussions welcome.
#交易策略

Trading is an infinite game

Let me first talk about the right of choice.
I understand the right of choice to be like playing chess. As long as I still have pieces to move in the next move, the game can keep playing.
The more possible moves there are to choose from, the richer the possible evolution of subsequent chess games, similar to a multiverse.
When you reach a point where you run out of options, the game will be over.
The same is true for trading, but the various choices in trading are to prioritize ensuring that you stay on the poker table.
As long as you are still in the market, you have a probability of making profits from the market.
Profit is just an inevitable event with a very small probability. Although the time is uncertain, it will definitely come. #交易策略

Can delayed gratification be profitable?

In the marshmallow experiment, children can get double candies by waiting. This kind of delayed gratification is deterministic and relatively easy to achieve.
In trading, even people who tend to delay gratification will be more likely to choose small profits (immediate gratification) because of the uncertainty of profit results.
From another perspective, it is a minority of people who tend to delay gratification, and in transactions, the minority group itself has certain advantages.
Although there is no causal relationship between the minority itself and the advantage, in terms of the probability of obtaining a trading advantage, the minority group has a probabilistic advantage.
Because a few people have more choices, the majority will reduce their choices at certain critical moments due to the herd effect.
Therefore, although you may not be satisfied after a delay in trading, you can greatly increase the probability of satisfaction (profit) #交易策略

Consistent trading is good trading
There are many links in trading. Good trading requires doing each link right, while poor trading only requires doing one wrong link.
From this point of view, it seems that every aspect of the transaction is important. Why should "consistency" be mentioned separately?
Because if there is no consistency in transactions, you will fall into a vicious cycle of dogs biting their tails.
If you can't get out of this vicious cycle, you won't be able to truly enter the door of trading. #交易策略

A brief discussion on the advantages of low winning rate

Winning rate, odds, and trading frequency are the three elements of trading. Today we will talk about winning rate first.
Generally speaking, everyone prefers a high winning rate. From a human perspective, people like to affirm themselves and are reluctant to admit that they are wrong.
At the same time, people tend to be more certain about the future, and certainty means safety. Most people probably don’t like the uncertainty of whether they’ve had their last meal or not.
Based on the dislike of admitting mistakes and the preference for certainty, these two underlying human code settings, the pursuit of a high winning rate in trading is only natural.
but
If most people like a high winning rate, then a trading strategy based on a low winning rate will have a natural probability advantage. After all, it is not common for "idiots" to lose 7 times out of 10 and still persist.
What do you think? #交易策略