Ten years ago, when I first started margin trading, the first thing I did when I got home from get off work every day was to sit in front of the computer and watch the K-line go up and down. Based on the market sense, I went short for a while, and went long after a while. Maybe five or six back and forth a night. There is no rules at all in the transaction, and they all fight in and out based on their feelings. Of course, the end result is that many positions have exploded.
I’m not exaggerating. It was a friend in my roommate who was exaggerating at the time. Under my leadership, he also started to make foreign exchange deposits. It was red, it was really red-eyed, and the spirit was extremely excited, and it actually made sixty or seventy transactions in a few hours. And I don't know if it's the novice's luck that is generally good or what. On the first day, he actually made more than 500 US dollars. In fact, this was the beginning of the tragedy. I don't need to say the ending, you can guess it.
A novice who has just entered the market can easily make a mistake, that is, to make orders based on their feelings. To put it nicely, it is based on market sense. Because of the leverage effect of the margin market, you can see huge profits and losses immediately after entering the market. The mood is like a roller coaster, which is extremely exciting. Novices must enjoy this kind of pleasure, and even this kind of pleasure makes many people go on and on. Some veterans still do this. They don't necessarily want to invest to make money, but more like taking drugs, purely for excitement.
How to solve this problem? The prescription is what I wrote today: plan your trades, trade your plans. Let's talk about specific points:
Point 1: Plan your trade
That is, before you start trading, you must make a detailed trading plan, the more detailed the better, this plan includes: what price to open a position, what price to stop loss, what conditions are met to open and increase positions, and what conditions are met to start Reduce positions, where to close positions, etc., and then you can evaluate whether your plan meets two points: first, is the profit-loss ratio cost-effective? Personally, I think it can only be done with a profit-loss ratio of at least 2:1. If you don’t meet it, you can give up. Second, you can subjectively speculate on the odds of winning. If the odds of winning are less than 60%, you can give up. Making a good trading plan is the first step to become a mature and rational investor. Once you start planning your trading, you will start to say goodbye to the gambler mentality and step into the regular army.
A special reminder is needed: it is best to leave the market when making a trading plan, because the plan thought out in this way is rational, not an idea that suddenly popped up when you were watching the market.
Of course, when it comes to this, planning your trading is actually the first step in establishing your own trading system. It doesn’t mean that once you start planning, you will start to enter the stage of stable profitability. This road is far away, but you have already started to walk on the right path. The sooner I get rid of the stage of placing orders casually, the sooner I can get on the right track (unfortunately, no one gave me such guidance back then, and I could save at least 50,000 yuan in losses).
Point Two: Trade Your Plan
After the plan is formulated, you evaluate the risk of the plan is controllable, the profit and loss ratio is cost-effective, and the winning rate is good, then you must officially start trading. In fact, it is difficult for a novice to trade strictly according to his own plan at the beginning, and it is extremely easy to be swayed by his emotions. If you do not strictly follow your own plan, it is very likely that all the previous plans will become waste paper. Here are a few suggestions:
1. Once you start trading, treat yourself as a robot and follow your original plan 100%.
2. Many people are trading outside the market. When entering the market, you can first set the stop loss point and profit stop point.
3. Once all the orders are entered according to the original plan, there is no need to watch the market too much, because when you watch the market, you will change the original plan due to emotions.
Why do many people fail to carry out their plans? Including me now, it is still possible that the execution is not in place. The core problem here is: the biggest enemy of a person is himself. For trading, the biggest enemy is his own emotions and the shortcomings of his own humanity. How investors manage their emotions is a never-ending practice.
Well, if you read these four articles I wrote, it means that you really love trading. There is really no need for veterans to read this article today, because it is too superficial, but for novices it is very valuable.
It’s still the same sentence, you don’t need a reward for the article, if you have a friend who is also doing business, you can forward it to him.
In the end, there is another way for beginners, you can join our team, with experienced drivers leading the way, you can avoid many detours.
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