As a trader, what is the essence of trading, and how do you understand it?

I think the essence of trading lies in the management of risk control, and the most essential method in risk control management is called "profit, loss, loss and contraction".

I have written in many previous articles that it is very important to have a positive expectation trading system, and a good system must also have a top-level fund management model. The best model I have used so far is to win Shrinkage.

Winning, losing, and shrinking is to set an opening value when the principal is fixed at the beginning. This can be done according to your own personal preference, as long as it is the degree of risk you can bear. In the process of trading, there will be two results. For a period of time, you will make a profit or lose money. When you make a profit, you can increase your position appropriately so that your profit may continue to expand. However, if there is a retracement during the period, you must Positions that were even smaller before were retracted.

In the process of real trading, "profit charging" is relatively easy to achieve, because most traders want to continue to increase profits by expanding their positions after making a profit, and if profit charging encounters a market that is very suitable for their trading system Among them, it can indeed generate explosive growth in the account. Many trading accounts can be doubled in a short period of time because of the compound interest of profit charging, so the profit charging is not difficult.

The key lies in "loss and contraction", which is a very difficult thing to do. For example, we have lost money from the beginning, and the funds have withdrawn by 20%. At this time, according to the rules of loss and shrinkage, we must reduce the position, but why can't many people do it? Because what hinders them is a kind of thinking. This kind of thinking is that I used a large position loss for the previous loss, but now you let me reduce the position. What does it mean to reduce the position? If the following market is suitable for your own trading system, wouldn't you only make money with a small position? Isn't it far away or a lot slower to return to capital or even make a profit? Indeed, if the market is suitable for you immediately, you have indeed only used a small position to make money, or this part of the profit cannot make up for the previous loss, but have you ever thought that if the market is not suitable immediately, If the market continues to be unfavorable to wear out your account, then you are likely to be eliminated by the market due to a long period of unfavorable conditions in the next period of time.

Many people subconsciously believe that after a period of unfavorable market, it will increase the probability that the next market will suit their own trend. This kind of subconsciousness is unreasonable. The future market trend is uncertain. You have no way to prove that the market that suits you is coming, so what should you do? That is, don't die before the suitable trend arrives. And the most effective way of this is "input contraction".

In fact, what is more difficult is the "loss and contraction" after the profit after the initial profit. Because of the profit, when the market is unfavorable and the funds start to withdraw, many people are very unconvinced and psychologically cannot accept the money they originally earned. To the market, it is very difficult to make the action of "losing and shrinking". What's more, during the retracement period, instead of reducing the position, it increases the position, using the "lose and flush" method in an attempt to quickly turn a profit. These are very dangerous moves.

A person who wants to trade for a long time must take survival as the first goal. It can be said that the concept of winning against loss and shrinking not only guarantees compound interest when making profits, but also ensures survival during unfavorable periods. A trader who manages funds with the concept must have a relatively smooth trading account, and must be very good at controlling drawdowns.

As for the specific management method of profit, loss and contraction, I think it is a very good method to use the percentage of funds to open a position. The percentage of funds has a natural profit, loss and contraction mode. For example, if you have a principal of 10,000 US dollars and open a position according to 1% of the margin, 100 leverage corresponds to almost 0.1 lot. This is a very good model. When you make a profit of 2,000, the opening order is 0.12 lots. Similarly, if you lose 2,000, you will open 0.08. This is completely in line with the concept of winning against losses. By reducing the position when the market is unfavorable, even if the degree of unfavorable market may be greater than before, but because the position is reduced, the withdrawal of funds will definitely not be so profitable. This greatly improves the living space.

The essence of trading should be this kind of "immortality".

Are you satisfied with this answer?

Let me first talk about my understanding of several issues in the landlord's article:

1. Design a good system and follow it 1000% unconditionally.

Chen Xuanya: The design and verification of the system are extremely difficult, and the system may fail at any time. Where does confidence come from a system obtained from others? Everyone's cognitive ability is different. Different systems adapt to different people, and the system has to be explored by itself. This process of exploration is very long and painful. Without experiencing capital losses and profits, psychological endurance cannot be developed. , and most people who do business are quite conceited, and they often don't look back when they touch the south wall.

2. Stop loss and stop profit

Chen Xuanya: There is nothing wrong with stopping loss and stopping profit, but how to stop loss and stop profit cannot be explained clearly in one or two sentences. There are many ways to stop loss, you have to find the one that suits you; the same is true for stop profit. According to different trading levels, the stop loss and stop win plans adopted will also be different, and it is also difficult to use them immediately.

3. Don't let yourself have a little subjective judgment in place.

Chen Xuanya: If the first point is achieved, the second and third points are actually achieved. A mature trading system must contain a stop loss and stop win strategy.

Q: If you hold a loss, your position will be liquidated. What if you hold a profit?

Chen Xuanya: When holding a position, it is a fluke mentality, and I am not willing to cut the position. But when you are winning, the psychology of being safe in your pocket will dominate you again, and trading is full of difficulties. If you don't have strong confidence, there are many people who will run away after a few points of profit.

In the end, the poster said: simple things are complicated, and complex things are simplified. It is very good, but it is so difficult to practice. It requires funds to achieve it. Unlike other industries, the cost of practice is much lower.

The old man Deng Xiaoping said: a white cat is a black cat, and the cat that catches mice is a good cat. Therefore, if you want to make a profit in trading, you need to study the winning rate and the profit-loss ratio. Take fishing as an example: where to fish, what rod and bait to fish with. Think about these two things clearly, and then talk about fund management and psychological factors. If the foundation is not laid well, no matter how much money is channeled, you will not be able to make much money, and no matter how good your mentality is, it will not be so useful. This is not to say that money management and mentality are not important, but they are less important than winning percentage and profit-loss ratio.

I have been doing trading for nearly ten years, and I am currently doing it with my own team. I would also like to briefly talk about my own opinions on this. Please add or make suggestions if I am not satisfied, thank you.

1. Risk first, profit second, calculate your own profit probability based on historical data, calculate your maximum loss based on this and then allocate positions reasonably, always do a good job of risk control, and don't carry orders.

2. If you know where you are going to die, then you just don't go there for the rest of your life. For example, if you can’t do well in gold, you don’t do gold. For example, if you make a lot of losses because you make orders for the sake of making orders, then be patient and wait for opportunities... You must find out the reasons that lead to your losses and then avoid or correct them.

3. While avoiding the varieties and methods that you are not good at, find out the varieties that you are good at and the reasons for trading profits, and keep them well. If the profit and loss come from the same source, for example, the loss is due to carrying orders, and the profit is also due to carrying orders, then I am sorry, it means that there is a problem with your trading system, and it is time to change the trading system.

4. Regarding the issue of the trading system, my personal opinion is that the trading system should have multiple cycles of analysis, and the things contained should be simple and refuse to be complicated.

5. Finally, there are issues of execution and trading mentality. Regarding execution, as long as you trust your own things, you will naturally execute well. Regarding the mentality, if you execute well, you will make money, and if you are sure of your entire system in your heart, you will naturally have a well-thought-out plan, and everything will fall into place.

exchange these for now

Personally, I think the core elements of trading: following the trend, stop loss (risk control), rules, and execution.

Without knowing the trend judgment, it is impossible to follow the trend, and trading against the trend will inevitably encounter frequent and unnecessary stop losses.

If you are not good at stopping losses, you may carry orders and get caught in it, leading to a vicious circle of mental confusion and gambler thinking. Major losses and liquidation often occur at this time.

Without rules and without establishing a constrained trading mechanism, it is possible to trade emotionally, regardless of risks, and losses are inevitable.

With rules, but no execution, everything is equal to zero.

Only by following the trend, stop loss (risk control), rules, and execution ability can we gradually form a trading system with controllable risks and executable strategies.

This person's speech is very good, but it is still at the level of mechanical rules. What he speaks should not be superstitious, thinking that there is only one way to trade.

The essence of trading is offense and defense, and the way of trading is the way of offense and defense.

Starting from the deep principle of the way of offense and defense, there are many ways to trade, and what he talked about is a specific way to implement offense and defense.

To implement the way of offense and defense, it starts with trading strategies and trading models. To implement this level is to design a trading system and implement it mechanically as mentioned by the trader in the topic.

Then there is position closing and closing. Realizing that position closing and opening is the core link of trading, then learning to trade has basically reached an advanced stage. The sign of successful learning is the loss and shrinkage of positions, and the record will be that small funds will quickly double and grow, but the risk will not expand accordingly, achieving huge profits under risk control.

The latter realm is difficult to achieve. Most people can basically make stable money when they reach the realm of traders mentioned by the subject, and many people are satisfied. Those who have no capital can also get other people’s money to make a living by trading, and they have no motivation to do so. Continue to explore at the risk of failure.

Why do you say that continuing to explore is a risk of failure, because growth requires breaking the boundaries of capabilities and jumping out of the comfort zone. Technically speaking, it is necessary to break the established trading rules and expand the original cognitive boundaries, and personally destroy the trading rules that have been cultivated for many years, and then rebuild new trading rules. With stable profitability and non-technical paths (such as receiving funds to make money) to help satisfy their desires, many people have no courage and no motivation to continue exploring.

People who really love trading will put exploration and growth before making money to satisfy their desires, and will never give up until they practice trading to the extreme.

For trading, I personally think that the premise must be to build our own trading system, that is, the rules of our trading operations, so that we can enter and exit the market with reason and evidence, instead of simply entering and exiting operations based on feeling. After we have a trading system, we will continue to execute , repeat execution!

Recommend some trading system systems to build a system to build a thinking framework, I hope it will be helpful to everyone...

Take advantage of the trend to stop losses and light positions.

In the final analysis, trading is a process of cognitive realization. How deep your understanding of the market is, how high your income will be. On the surface, trading is just to earn the price difference of the market, but in fact it is the integration of the trader's understanding of the market, trading system, and trading psychology.

After all, trading is not a one-shot deal, but the consistency of the overall trading system must be considered. A long-term trader must have an internal logical cognition as the basis to guide the transaction. Therefore, cognition determines the way out, and cognition determines the income. The reality we see is also: the profitable transactions are often the same, and the losing transactions are different.

Recognizing and deeply understanding the "cookie-cutter" commonality of these profitable traders can take many detours. Of course, many traders talk about their trading mentality after losing money. Yao Fat thinks this is an extremely one-sided self-evasion, so the core reason for losing money is that the cognitive laws and characteristics of the market have not been clearly understood, understood, and understood. Yao Pang believes that the three key words of cognition are the three words we often talk about: boiling frogs in warm water, taking advantage of the trend, and light storage.

One, boil the frogs in warm water.

What is the core reason why we lose money in all transactions? It is based on the obsession and fantasy of the market based on the wrong subjective judgment of the trader. Yao Fat calls it a boiled frog in warm water. They will blind our eyes and cannot see clearly behind the market. Nature. Of course, excessive excitement and nervousness are unhealthy emotions. The market requires traders to face themselves and the market objectively and calmly, find their bottom line of principles, analyze their own system and character, and face themselves sincerely. , so to a certain extent, trading is also a process of internalization and improvement of self-cultivation.

Whether or not to do stop loss is a matter of attitude, and whether to do stop loss well is a matter of ability. If you have a problem with attitude, you will never be able to do well, but ability can be cultivated step by step. Losing all the principal together, there are too many lessons like this. The consequences of wrong actions and good results for a trader are often devastating.

The entry point of the market is basically waited out, not subjectively judged by oneself. Wait until the entry point meets one's own entry point, make a wrong stop loss, that's all. Grasp the initiative of the market, control people instead of being controlled by others, first To be invincible, to be victorious to the enemy. The logical basis of market analysis is that the market is inclusive, and the market is always right. The current market price is always the best price after the game between buyers and sellers, and it is a price recognized by both long and short sides. As retail investors, we do not have the ability to change the price, so we can clearly understand our trading principles and boundaries. When the market suits our system, we can just intervene. Don't try to fight against the market or take it for granted. Everyone understands the consequences.

Stop loss can be a good self-defense for novices, and it is a good tool to test the market temperature for veterans. The narrow stop loss is the stop loss of the superficial order, and the broad stop loss is the different stages of the market and trading strategies The balance of income. Stop loss is part of the transaction cost, which can maintain high mobility. We must understand that the difference between a master trader and an ordinary trader lies in the relative winning rate under a system framework, and it is not mainly the ability to deal with details. The premise of this detail is that we need to be clear about the overall transaction framework

Profit and loss come from the same source, stop loss is to enter the market, and you can also enter and exit the market. Not all stop losses are to lose money and exit the market. In the early stage of the transaction, stop the loss and survive. In the middle of the transaction, the winning rate is improved. Cultivate your mind, be patient and persevere. This is a gradual process. There is no stop loss, and there is no story behind it.

Second, take advantage of the trend

Following the trend, what trend to follow, and where the trend comes from, we must think clearly. This trend is the overall current trading situation. In most cases, the fluctuation of our market is not always unilateral, but a process of continuous interweaving of unilateral shocks. If the market goes up, it is possible to knock out the stop loss below and then go up, or it may go up directly, or it may go up first, then go down, and then go up; of course, it is more likely to stay here for several days. We need to distinguish what the overall situation is, and how to choose the entry point that is beneficial to us. In a relative space-time frame, time-for-space is one-sided. Space is exchanged for time to oscillate. Many of our traders are familiar with the key points of many transactions, and also understand the principles of many transactions. Why are they still unable to make transactions? Yao Pang thinks that there is still a lack of understanding of the core logic of the market.

The market has its inherent fluctuation law. The road is simple, the cycle is eternal, the market runs in the direction of the trend, and history will repeat itself. So the trend is just a fragment of the trend. The trend is composed of shocks and unilateral, and the trend is a unilateral trend. And the trend is a part of the market cycle A piece, of course, regardless of the time period, it is not very meaningful to talk about the trend. Different time periods correspond to different trends and trends. The overall principle is that the direction is confirmed by a large cycle, the entry point is confirmed by a small cycle, and the direction of a small cycle is subject to a large cycle. This is An overall trading principle.

Three, light storage.

We are traders, and traders are also human beings. Humans will make mistakes, have emotions, and have many unknowns about the market. Of course, there are many black swans in the market. As traders, we need to go through so many pits , Light storage can allow us to have better market tolerance, which is self-consistent with our life.

Stop loss, follow the trend and light position is a common topic among our traders. It will never be outdated at any time, and its importance cannot be overemphasized. This is the foundation of our existence in this market, and we all need In-depth understanding from a global perspective and implementation at the operational level. Transitional light positions will cause a waste of funds, and the rate of return is relatively low. Reasonable positions should be reasonably configured according to the attributes of the traded varieties and trading strategies. Next time, foreign exchange Attributes of trading varieties and classification of trading strategies.

The essence of trading and other industries are figured out, in all knowledge reserves

With accumulation, the only way to achieve stable profits is execution, which is the only way, and there is no one.

Trading is about high probability and probability. The price trend is random, but the random trend also includes non-random trend. To do non-random trend is to do probability

The essence is independent thinking. All the information you get is incomplete and lagging behind. Only omniscience can be omnipotent. You can’t boast that you can draw correct conclusions based on this information, and you can’t easily and completely copy the conclusions drawn by others. Learn more about socialism with Chinese characteristics

Trading is a battle between yourself and yourself. Overcome your own greed, fear, fluke, and various human weaknesses. The essence of trading lies in a perfect trading philosophy, persuading your own trading system to formulate a plan, resolutely and decisively execute mechanized trading, abandoning human weakness, and treating yourself as a machine.

The essence of trading is not to lose money! If you can survive in this market without losing money, you have already defeated 90% of the people! If there is still a small profit, then congratulations, you have defeated about 99% of the people

The unity of knowledge and action and steel-like discipline are the premise of a consistent strategy and the only way to enter the success of speculation.

The essence is to gradually become proficient in consciously correct trading to unconsciously correct trading. What is correct trading? Before you get the answer to this question, you need to figure out what your advantage in the market is. If you can’t figure it out, keep thinking and keep thinking until you understand it! If you still can’t figure out your advantage in the market What is the advantage, sorry, you should leave this market! If you want to understand what your advantage is in the market, you will naturally want to understand what is the right transaction.

Summarize a possible high-probability signal in the early stage of the band through the review. Regardless of whether there is a band in the end, you must rush in and formulate a set of exit plans. There is only one signal for entering and exiting the market. If there are too many signals, it will be useless. That's all, the above text needs to be carefully comprehended, and the details must be supplemented by yourself. I hope someone who is destined can get it

As a most astute trader,

One, you can make money without a good attitude.

Second, it is not possible to make money with technology.

Third, it is not possible to make money with a strategy.

I think the most important key is (Keep up with the direction of the market. I will follow it wherever it goes. If you can keep up, you will make money. If you lose it, no matter whether you are a master or a novice, you will lose it. deficit.)

Ten years of work off stage, one minute on stage.

Go ahead, spend ten years writing down the simplified characters and see if it looks like your simplified characters from ten years ago.

When making orders, you must set a good stop loss and take profit, and do it near the technical support level. There is no such thing as going with the trend or going against the trend in the market. You never know whether it will reverse in the future. As long as you place orders near the support or pressure level and set a good stop loss and take profit, your profit may be magnified up

The essence of trading is the management of funds...

For me, the core of trading lies in bold assumptions and careful verification. If there is a holy grail of trading, I believe it is this.

These eight characters are very simple. But simple things often contain profound truths. If you need to understand it, I hope you can think about it after reading the article.

The market is turbulent, and no one can and cannot predict the future trend of the market. I believe this sentence has long been said by many people in the industry, and the audience has also heard it.

But many people who are hovering in front of the trading door just don't understand. If the market is unpredictable, then what are we doing with our various means of fundamental analysis, technical analysis, and psychological analysis? Isn't this predictive?

In fact, if you use these things above for trading and use them as entry conditions for trading, then you are really predicting the market. Believe me, eighty to ninety percent of the people in the market are doing this kind of thing. If you're one of them, I'm not surprised, because I used to be.

Before answering why it is said that trading the market in the above method is forecasting, let's consider a question.

You and your cat are sitting on the grass, looking at the sunset in the distance, do you think that the sun in your eyes is the same, emitting warm and soft light?

In theory, you're both looking directly at the sun, and since it's setting, the sun isn't glaring. So, you think, the same is true for cats, it is also very comfortable watching the sunset.

But actually? You are not a cat, you don't know what the world looks like in its eyes. You can only know whether it is sensitive to the afterglow of the sunset by observing its behavior changes.

If there are some other species at this time, such as dogs, horses, and sheep, will the sunset in their eyes be the same as yours?

You still can't get the answer, you can only observe the behavior of other animals to understand how the sunset looks in their eyes, just like observing cats.

In NLP (neuro-linguistic programming), there is a very important saying: a map is not a territory.

I hope you can make a note of it.

Human cognition and the real world are completely different. What is the world like? Different species may see it completely differently.

So, for us humans, the world is a map, but the map is not the real world.

This sentence corresponds to the market as well.

Each of us has a map in our minds, which guides us to judge the market and find trading positions and directions that may be beneficial to us.

The market consists of hundreds, thousands, and thousands of different maps, and these maps are constantly being updated and changed. So, how can you, holding a map, predict the reality of the decisions made by millions of people? world?

No matter who you are, how smart you are, or how many methods you have learned to analyze the market, it is all useless. Because you are not the market itself, all your cognitive decisions are flawed and incomplete. Decisions are made probabilistically in any market with incomplete information.

The market is not a math problem, not a program. You are given a few conditions. If you satisfy the conditions and fill in the parameters, you will always get the same return.

impossible.

In a black-box environment, all variables and conditions are unknown, and you may be able to obtain some results through continuous functional testing, but you cannot guarantee that the results are always correct.

Therefore, anyone can use any method to explain the market prediction market, but please believe that the market will only choose a certain answer at a certain moment. And this process is always random.

So, is it useless for us to learn so much knowledge and study so much market-related information and technology?

No.

Knowledge is good, but its purpose is not to help us make decisions, but to help us confirm assumptions.

A man leaves work from the company and he is going home. If nothing else, he can walk home in 15 minutes.

But whether he walked there in 15 minutes or 20 minutes, or even went to a friend's house halfway, was hit by a car and went to the hospital, you don't know. Because he hasn't started the journey yet.

If you are his friend and you judge based on his past home history, and you find that he arrives home in 15 minutes every time, then you believe it is the same this time. Based on this experience, you take out 1,000 yuan to bet 100 yuan with another colleague, betting that he will be home within 15 minutes, and then earn 100 yuan from the colleague.

You think you have to win, so you bet big.

But what is the truth? Maybe you won, or maybe the other party really happened to be late today. In any case, these things can only be determined after they happen.

We do transactions in the same way. We take the map in our minds to match the market, then place bets, and wait for the market to go according to our expectations.

But you are not the market, how can you let the market follow your expectations?

Your thinking concepts are all wrong.

In the face of the market, you can only make assumptions, assuming that the market will go on according to your theory, then if your assumption is successful, then the market will naturally follow your expectations. But what if your hypothesis doesn't pan out? Essentially, your assumption fails, and since the assumption fails, then this transaction has already failed, and if it fails, you have to admit defeat. At this time, what you consider is not why you failed and how to recover from your failure. Instead, consider how to minimize the loss caused by failure.

But how do most people do it?

They use their own set of theories to predict the market, where there is a divergence, there is a W bottom, here the main force enters the market, and then choose to enter according to these conditions. In the end, when the market did not meet my expectations, I firmly insisted that there must be opportunities here, but it only takes a little time, and it is just that I bought early and temporarily pulled back, so the market will not be dragged down.

When the trend is more and more inconsistent with my expectations, in order to insist that I am right and force myself to comfort myself and hypnotize myself, the market is a bit oversold here, and I must not sell here, and there may be funds coming in to buy the bottom soon.

In the end, when the funds reached a loss that he could not bear, he reluctantly liquidated his position with a sigh. But at this time, he found that as soon as he left the market, the market immediately reversed, but this time the transaction failed, which had severely damaged his trading confidence. Even if the market began to recover, he did not dare to chase it again.

See, this is what people who predict the market do.

The purpose of trading here is to prove that he is right, and the market will definitely follow his theory.

But the market never favors anyone.

Written here, I have said all that should be said.

Each of us's interpretation of the market is just the tip of the iceberg of the market. There is no theory or method that can predict the market. Any theory can only be falsified by the market, not the market. Once this master-slave relationship is reversed, Your way of trading will never be successful.

Finally, I wish everyone an early and stable profit! ~