We often say that in order to achieve real stable profits, we must establish a trading strategy that suits our personality. When the matching degree between personality and trading strategy is high, the trader can better execute the trading strategy, and the body and mind will be happier and healthier.
When the personality does not match the trading strategy, it is difficult for the trader's comprehensive ability to be brought into full play. For example, a person who is extremely introverted and is not good at performing in public, even if he sings well, he is forced to appear in public. When performing in front of a singer, he is usually unable to show his best singing level due to extreme nervousness.
The same is true for trading, so everyone says that in order to do a good job in trading, you must establish a set of trading strategies that match your personality. Although many novice traders know this truth, it is difficult to do it. The biggest difficulty is that it is difficult to know your trading personality. "Personality" is often misunderstood by people. Many people mistakenly think that there is only one kind of personality, which can be simply handled with a label. For example, we often say that someone is very introverted and someone is very forthright. In fact, human personality is very complex and rich. There are many kinds of personality in a person. For example, an introverted person also has an extroverted side, and a cautious person also has a careless side.
To achieve a high degree of matching between personality and trading strategy, one must find out one's own trading personality. The trading personality cannot be simply equated with the daily life personality, and some people's trading personality is even completely opposite to the daily life personality. So how do we find out our own trading personality? Today I will give you a simple math problem, you can use this math problem to figure out your own trading personality. This question is also the core of this article. Please see the question:
Suppose there are three trading strategies:
A
The success rate of strategy A is 20%, earning $4,500 each time it makes a profit, and losing $1,000 when it loses;
B
The success rate of strategy B is 50%, earning $300 each time it makes a profit, and losing $100 when it loses;
C
Strategy C has a success rate of 80%, earning $200 for each profit and $300 for each loss.
Which strategy is your first instinct to make more money? Do you prefer that strategy? You may have chosen B, or you may have chosen C, or you may have taken a fancy to strategy A at a glance.
By calculating the expected value of this question, we can get:
The expected value of strategy A is 0.2*4500-0.8*1000=100 US dollars;
The expected value of strategy B is 0.5*300-0.5*100=100 US dollars;
The expected value of strategy C is 0.8*200-0.2*300=100 dollars.
Judging from the actual effect of stable profits, the three strategies are the same, but why do people have different preferences for the above three strategies? This is caused by the different trading characteristics.
Those who like strategy A, although the success rate is very low, but once they succeed, they will earn a lot of money, or they will not open, and the happy feeling of opening for three years will make many traders unforgettable; those who like strategy B, the success rate is 50% , the profit-loss ratio is ideal, this method is easier to see the results, as long as you persist in doing it and strictly control the position, from the perspective of probability, it is predictable to achieve stable profits in the long run. Those who like strategy C have a success rate of 80%, and 8 of 10 transactions will make money. Many people feel very satisfied with the multiple consecutive profits recorded in the transaction.
If you choose strategy A, it means you are a relatively aggressive trader; if you choose strategy B, it means you are a relatively moderate trader; if you choose strategy C, it means you are a relatively stable trader trader.
The above three strategies have their own characteristics. Due to the low success rate of strategy A, this strategy is difficult for novices to copy and learn. Few people can bear the mental pressure of continuous losses, and they will gradually lose the will to continue Confidence; strategy B has a 50% success rate, even if it is a random coin toss, there may be many consecutive heads or tails. If the risk control of a single transaction is not strictly controlled, it will cause continuous losses and bring extreme losses A lot of mental pressure; strategy C is strong in the success rate, but the profit-loss ratio is not good.
I personally think that I am more inclined to the improved version of the C strategy. Personally, I prefer a robust trading strategy with a higher probability. Strategy C has a high probability, but the profit-loss ratio is not good. I will choose C and try to increase the profit-loss ratio, so as to ensure that the profit-loss ratio when opening a single transaction is 1. :1 or more. In addition, I personally think that strategies with higher probabilities are easier to learn and copy. Higher probabilities have relatively higher requirements for transaction details, which is helpful for traders to lay a solid foundation for trading; continuous multiple profits can also enhance learning confidence and ease Mental pressure, and learn how to increase the risk-reward ratio and control trading risks while maintaining a high probability.
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