Thank you for the invitation of the sound factory. With the title of the teacher "Jiaoyi Golden Eagle", I will also talk about "how to build a reliable trend trading system". This topic contains three meanings, systematic trading, trend trading and reliable trading. In the original text, the teacher "Jiaoyi Golden Eagle" introduced in detail the concept, structure and methods of his trading system, which is worth learning and learning from. But systematic trading is a topic with thousands of people, and almost every trader has a different system. Of course, when many novice traders look at other people's trading systems, they always feel good but don't know what's good, or think there are problems but don't know where the problems are. In the final analysis, it is because they don't have their own system. Here, Mazhu is not trying to evaluate the system of the teacher "Jiaoyi Golden Eagle", but wants to talk about systematic trend trading from a more basic point of view, hoping to help everyone understand what is systematic trend trading and how to build a system. Systematic trend trading.
(1) Only systematic transactions can guarantee stable profits
If you count from the establishment of the Amsterdam Stock Exchange in 1609, financial transactions in the modern concept have lasted for more than 400 years. During the 400 years, countless traders have followed suit, proving that only systematic transactions can be realized Stable earnings. So what is systematic trading? To put it simply, it is to respond to whatever phenomenon occurs, and to fix this conditioned reflex process. The opposite is random trading, where traders interpret trades differently, resulting in randomization of the final execution. Because the vast majority of ordinary traders cannot know the exact influencing factors behind the development of the price market. Faced with the same market development situation, different traders give different subjective explanations due to differences in information channels, cognitive levels and other factors. , even the same trader will give very different explanations when facing similar trading conditions at different times due to differences in information channels, cognitive levels and other factors, so the judgments drawn tend to be random in the end , leading to randomization of transaction execution.
(2) The basis of systematic trading is technical analysis
Systematic trading is based on two assumptions of trading technical analysis, the first assumption: market prices reflect everything, and the third assumption: history will repeat itself. We ordinary traders don't need and can't care about the hidden factors behind the price. We only know that there is some factor that affects the price rise, no matter what it is, the price has risen, and there is no sign of decline. It shows that the influence of this factor still exists, and the price rise will continue. We ordinary traders also cannot predict what kind of factors will lead to what kind of results. We can only see from the price pattern what kind of market behavior will always be accompanied by what kind of follow-up market. When we find the same market behavior again When the time comes, it will participate in the market and expect it to go out of the same follow-up market. Therefore, the first step in systematic trading is to establish this conditioned reflex system based on changes in price patterns, which is the so-called "technical analysis". Technical analysis methods can be roughly divided into two categories, one is based on price patterns, For example, various candle chart combinations, one is based on price action, such as market breakthroughs, reversals, and many technical indicators such as golden crosses and dead crosses. No matter what kind of technical analysis means, the purpose is to reveal how the next market will probably develop, and to tell traders the most likely start and end times, that is, entry signals and exit signals. It should be noted that the actual factors that affect the development of the market cannot be the price pattern in any case. The price pattern and the subsequent market results are by no means causal. Just like the appearance of the morning star indicates that the sky is about to dawn, but the dawn is definitely not caused by the morning star.
(3) Systematic trading must be assisted by fund management
Therefore, the technical analysis method used in systematic trading, no matter what the technical method is, is essentially a subjective sampling and classification judgment, which only has statistical significance, and there is no real and objective law of causality in it. . Systematic trading also cannot avoid risks, cannot rule out judgment errors, and the transaction winning rate cannot be 100%. Therefore, systematic trading must be assisted by systematic risk control to ensure the continuation of trading accounts. The risk management and control methods of ordinary traders are relatively simple, mainly achieved by controlling positions, so it is also called fund management. The main purpose of fund management is to achieve a relatively considerable expected rate of return on the premise of ensuring that the account is not subject to heavy losses. . If the position control is too low, the risk is small, but the rate of return cannot be guaranteed. If the position control is too high, the rate of return is very high, but once the loss will bring about a huge account withdrawal, the loss outweighs the gain, so traders Only by finding a balance point between the rate of return and the retracement ratio can we really do a good job in fund management.
(4) Systematic traders must have a strong trading psychology
We have previously Therefore, purely excluding human judgment, objectifying and mechanizing the transaction will not yield good results. Mechanical traders have been very popular for a long time in the past, including the famous turtle trading rule, which is a mechanical trading system, and various EA trading programs, which are themselves a mechanical trading system, and they can often be used within a period of time Big profits are made, but it is inevitable that there will be a large proportion of retracements or continuous losses. Because with the continuous development of the market, the trading signals subjectively judged by traders often lose their effectiveness and lead to a decrease in accuracy, while the mechanical trading system cannot judge this change, and it is still mechanically executing the established trading signals, which will inevitably lead to losses. A good trading system is a reaction to the subjective thoughts of the trader, not an objective fact. It will continue to evolve and adjust according to the trader's interpretation of the characteristics of different market conditions. This requires the trader to keep a clear mind and a strong psychology at all times Quality, being able to discover the shortcomings of the trading system in time and correct them, when to implement the system firmly, and when to re-plan, only traders with strong psychology can give correct judgments.
(5) Trend trading is only a method of systematic trading
The basis of trend trading thinking is the second of the three assumptions of technical analysis: market conditions always develop in the form of trends. It can be understood that once the direction of the market is formed, it is difficult to change, and once the direction of the market is changed, it is difficult to recover, and the market always moves in a certain direction. Trends and shocks are the eternal themes of market development, but absolute shocks seldom appear. Most shocks are also composed of small-scale trend markets one after another. Therefore, the first task of trading is to judge the development direction of the current market, and also It is to judge the market trend. To judge the trend, you must first have a trend model. Whether it is the classic high-low point trend model or the central trend model proposed in Tanglun, traders must have their own trend model in order to have a standard for judging trends. I personally prefer the central trend model in Tanglun, because it clearly divides the shock market and the trend market, and solves the problem that the high-low point trend model cannot judge the trend in the shock market. The core of trend trading is that traders can only participate in a part of the trend market along the trend direction, and do not participate in any counter-trend callback or rebound market. As for the specific entry and exit points, there are different trade-offs depending on the length and short-term. I won't go into details.
(6) How to improve the reliability of the trend trading system
There are several parameter criteria to evaluate the pros and cons of a trading system: ① Trading winning rate, ② Profit-loss ratio, ③ Position ratio, ④ Account withdrawal rate, ⑤ Account return rate, among which ① and ② are roughly inversely proportional. At the analysis level, excessive pursuit of the winning rate will often reduce the profit-loss ratio, and ③ will affect ④ and ⑤, and the position will increase, which will increase the account return rate to a certain extent, but it is likely to increase the account retracement rate. There are two balance points in the trading system. One is the balance between the winning rate and the profit-loss ratio. If the winning rate is one-third, the profit-loss ratio must reach two to one to be balanced; the second is the balance of the position ratio, so that the account withdrawal rate As small as possible, the rate of return as large as possible. Traders can continuously count these five parameter standards in the transaction. A reliable trading system must first be stable. If you trade ten times, one hundred times, or one thousand times, these five data will be similar, which means that your system More stable and more reliable. Our ultimate goal is to make the account return rate positive and as large as possible. This requires us to constantly analyze which aspects of our trading system are still deficient. Is the technical level difference and the winning rate too low? Or is the psychological quality not stable enough, resulting in an unbalanced profit-loss ratio? Is it a big retracement caused by heavy positions? Or the big market and small returns caused by not daring to increase positions? Always be able to specify the problem, so as to guide us to optimize the system.
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