Ten-year veteran Liszt's trading secrets: how to stop profit taking?

With the improvement of Lister's trading technology, trading strategies are becoming more and more systematic. After Liszt mastered the cycle ratio observation method to understand the rhythm of price fluctuations, used the fluctuation contraction method to select the signal for entering the market, and determined the number of trading hands according to the risk fluctuation threshold before entering the market, he found that he still could not make his net worth curve Maintaining a steady rising state for a long time, sometimes a good trend transaction that has been waiting for a long time ends up taking too much profit.

Liszt realized that his systematic trading strategy still lacked a perfect and flexible exit mechanism.

Prior to this, Liszt used a simple and direct way to leave the field, that is, leave the field when the predetermined odds are reached, which is what everyone often calls the profit-loss ratio. The stop loss exit is a loss to 2% of the price fluctuation, and the profit exit requires a profit-loss ratio of 1:2, that is, the profit to 4% of the price fluctuation before leaving the market.

This exit method is set entirely according to the odds. Simplicity and directness are its advantages and also its fatal disadvantages. The rigid way of entering the market and premature profit-closing lead to the waste of many major trending market conditions. The overall trend may last for half a year, but the time for the real rapid price movement is only a dozen days.

If there is a better exit mechanism, the Sharpe ratio of the net worth curve can be greatly improved.

Liszt is constantly thinking about how to maintain relatively flexible exit rules while keeping the high odds unchanged. One day he came across Van K Sapp's book, which mentioned a compromise exit mechanism: multiple exits!

This is a way of setting up multiple (usually two) different types of exits. The different exit methods all maintain the advantages of the overall transaction system. Liszt was greatly inspired by it, and gradually formed an exit mechanism suitable for his style of grasping the trend and swing trading within a few days.

As in the past, Lister found a stable price fluctuation feature through analysis and summary from the massive historical data. After statistics, he found that according to his current trading cycle, holding for an average of three days will have the highest cost performance, because of the volatility entry method of chasing ups and downs, the average volatility of the K-line in the last three days is higher than that of any other days. The average volatility is larger.

Therefore, Liszt first formulated a unique exit mechanism: time exit. If you are in a profitable state, you can take a profit if you have held it for three days.

Later, he found that if the same reverse signal appeared during the holding process, although he was not in a hurry to backhand immediately, he could immediately leave the market and wait and see, and he could enter the market again if the subsequent stabilization stabilized. This kind of exit mechanism can ensure that too much profit will not be taken away by a sudden big reversal, and Liszt's exit mechanism has finally become systematic.

Since then, Liszt's trading system has been more perfect, which has greatly improved his overall trading performance, and laid a solid technical foundation for improving trading psychological skills in practice.