Since the advent of the capital market, mankind has had an invisible battlefield of brutal competition for interests, and various theories on how to fight in this battlefield have emerged.
I often warn myself that a professional trader must be brave and decisive when the market is good, and must be cautious and careful when the market is not good, and recklessness and timidity should not be personality.
Jesse Livermore, a famous Wall Street trader, once said a thought-provoking sentence:
"The difference between gambling and speculation is that the former bets on market fluctuations, while the latter waits for the inevitable rise and fall of the market, in which gambling will sooner or later go bankrupt."
Years ago, I posted this sentence on the computer I use for trading. In the market, the most common problems we encounter are such as "where can we go up (down)", which may be inadvertently raised as a topic of conversation, or may be a serious topic of inquiry, but often really strengthen some of our thinking. That is, what exactly does the future hold for the market? How to predict or guess the future, people who are happy to explore such questions in real life are like carp across the river.
We often hear people proud of a correct guess on the market, which is a very normal and very understandable thinking, in order to explore and guess the "mystery" of the future trend of the market, I have studied from "I Ching Bagua, Purple Micro Bucket Number" to "Chaos Theory, Neural Network", from "astrological hypothesis and cycle hypothesis" to "wave theory and Gann theory" and even orthodox "macroeconomic forecasting" and other strange forecasting knowledge, of course, This knowledge is helpful and instructive in guessing how much the market is headed.
However, as a professional trader, he has long since stopped focusing on the exploration of such problems, and what professional traders should do is to "identify different market situations, formulate different trading plans according to different market conditions, and execute trading plans with strict discipline."
For, without discussing the philosophical proposition of whether humans have the ability to accurately predict the future (Dow theory holds that "daytime clutter" is unpredictable). In terms of "risk management, psychological control", which are important factors for successful investment, the latter way of thinking will make us think more carefully about markets and transactions. From my own trading practice, if I trade according to the former idea, the investment performance may fluctuate greatly, and the trading guided by the latter way of thinking can make me continue to make stable profits.
I respect and have indulged in these theories, but as a practical trader, I now pay more attention to the interpretation and perception of the market language itself, why are so many people addicted to the capital market? Is it all tempted by money?
No! The subconscious mind revels in the human "gambling" instinct, which is also an important reason why many people stay in the market. The pursuit of excitement, fear of boredom, blind confidence, repeated defeats and other "gambling" characteristics are caused by human nature, "daytime clutter" provides a lot of seemingly "feasible" can "win" opportunities, therefore, subject to instinctive gambling, many traders will be energy and enthusiasm in the hope of quick profit of the fluke psychology but can not really calmly observe the market, how to establish a stable investment style, investment strategy, investment psychology but not much attention, often frequent emotional trading and it is difficult to wait patiently for "in and out of evidence" The timing of the entry and exit.
No wonder trading guru Williams says that "my interest in the art of trading far outweighs the last deal or two."
What exactly does a trading plan do for trading?
How can the formulation of a trading plan, which at first glance, be a purely subjective thing, become an important means of maintaining objectivity? It is true that the formulation of the plan is subjective, but the most important thing is that the plan is not based on the prediction of the market, not on the basis of: because we predict that the market is going to rise, so we make a buying plan, but on the basis of what we do if the market changes. That is, the trading plan is a contingency plan, not a forecast plan. Make a contingency plan, as long as you recognize this plan, in fact, you are very aware of the risks and profits of this plan, as long as the market has a signal in the plan, you dare to resolutely implement, even if it looks like it will be wrong, it is also very clear about the cost of the error and whether this cost is beyond your own scope. Restraint is a protection and a means to force you to insist. The trading plan is actually a constraint, it will force you to move closer to the objective direction, and eventually form the habit of trading according to the plan, forming an objective transaction. Therefore, in my own experience, trading plans are indeed the most important means to ensure that I am more objective.
In addition, the formulation of a trading plan can also determine your pursuit goals. Determining the pursuit of goals can form corresponding operating principles and systems, and not want to seize every opportunity, and are unwilling to give up anything, but the result is that nothing can be grasped. The volatility of the market can easily make you lose the pursuit of the goal, and the loss of the pursuit of the goal, necessarily accompanied by the loss of the corresponding risk management, eventually makes you not clear what you want to gain (only a vague concept of making money), nor what you are prepared to lose (just worry about loss, but do not know how much to lose the brakes), until the loss is enough for you to bear it. The formulation of the trading plan can make all this clear, so that you have been in an active state, to avoid being disturbed by the disorderly fluctuations of the market and suffering from gains and losses.
The essence of trading, for speculators, is nothing more than what you are prepared to pay (how much risk you take) and what you want to get (as for how to pay, how to get it is a matter of trading technology).
If you don't have a strict trading plan before entering the market, but only have a vague framework in mind, then due to the fluctuations of the market price, it is difficult to determine how much you are prepared to pay, and it is difficult to determine what you really want to get, and everything becomes ethereal. Therefore, there will be no stop loss of the stop loss, no persistence of the position, no entry of the entry, and only endless regrets. And because of these regrets, you will also have the illusion that as long as you stick to your point of view, as long as you strictly implement the plan, as long as you no longer regret it, you can succeed.
For almost all investors, as long as you do not establish a strict trading record and trading plan, what remains in your mind seems to be the memory of what you saw right and did not operate, and as for what you read wrong and did not operate, you will soon forget. So, you only remember when you are right (of course, those who see and do wrong will also be impressed), and on this basis, you will have hallucinations and blind confidence. Until the loss is over, you will think that it is mainly your bad luck, not the level problem or the level problem but do not know how to improve.
Only when you have established a strict pre-trade plan and an after-the-fact operation record, can you really reflect on yourself, summarize yourself, and improve yourself, so that you are in a relatively objective state to evaluate yourself and the market, rather than relying on fragmentary memories to summarize yourself. I have always stressed the importance of objectivity for trading. Making a trading plan is one of the most important means to keep you trading objectively.
There is no fixed number of trading, what can make money is reasonable, successful trading is the repeated use of money-making tricks, and the exclusion of unsuccessful abandonment.
A successful routine, we can call it a trading strategy, we can also call it a trading system, what factors are contained in it, what changes have occurred, traders must have a good idea, the best way is to do a good trading diary.
List the factors that you think affect trading at the moment, such as: personality, time, amount of funds, trading methods, methods, psychological endurance and so on. Anyway, you can think of anything that has an impact on the transaction, and it's all listed. After that, start making orders the way you did before. For every trade, regardless of profit or loss, put a tick on the list above. When making a round of checks, table statistics, separate the profit and loss of the trade statistics. Do a period of time, a month, a quarter, summarize once, see which column on the form has the most checks (perhaps as many checks of several factors), which (several) is the current bottleneck. The advantage of this is that the influencing factors can be more comprehensively counted, and each loss will not be attributed to mentality or some other aspect. Therefore, this work is best to continue to do until the day when it is no longer traded.
The purpose of doing all this work is to maintain the consistency of trading, so that the changes in the various factors within your strategy adapt to the environment and fit the market.
Wealth is not stolen, let alone gambled, but waited. Although waiting is easy to say, it is actually a contest of mental and mental strength.
In the face of the unpredictable K-line and the price of rising and falling in the market, ordinary people are easy to fall into it, even if the rules and standards have been set before, it is likely that they cannot withstand the temptation of fluctuations and rush to attack, if the attack is successful, it is lucky, if it is difficult not to be angry, so that the results can be imagined. If you want to wait quietly in such a market, without showing your face and not being alarmed, you must have a strong psychological control ability. At the same time, there must be a certain amount of insight. The market may rise and fall several times in a day, but there may be very few ups and downs that really contain opportunities. The master's perception of the market and the strength and speed of the rise and fall can help them sift out some "opportunities", thereby reducing transaction costs. This kind of perception and judgment of market changes sounds simple, but in fact, it needs mental strength as a support. Every attack or abandonment requires repeated weighing and balancing of various elements to make a decision. In addition, waiting is not blindly stupid and waiting. Waiting needs to have a clear and real goal, you should understand what you are waiting for, if you really come, how to face it, which requires traders to have a clear trading system, which has specific settings for entry and exit standards, money management, and mentality control. Only in this way can we be targeted in the market.
The trading market has a different image in the eyes of different people. To outsiders, trading is like a casino, with two eyes closed and one gambling rising and falling, one hand heaven and one hand hell. In the eyes of ordinary traders in the bureau, the market is like a battlefield, up and down is like fighting and killing, don't care who I kill, who will kill me, just sharpen the knife, rush in and fight a bloody body, and finally just a success can be achieved.
In the eyes of the innings, the market is like fishing, fighting with patience and perseverance. Methods and means have taken shape, just need to quietly wait for the market to give the opportunity, the market in line with their own "hook" opportunities are like the "fish" in the water, calmly hook, safely close the line.
If the market hasn't had a chance, there's only one word, "wait." Master "fishing" will also have the situation of running bait, but it will never be like ordinary people, the whole body into the water to fight a fish dead net, or whether the fish hastily hooked, the result is wasted.
Trading to the depths, fighting is all about cognition and execution!
Due to people's limited cognition, the view of things can not always reflect the whole truth of things. Similarly, due to the limited cognition of investors, the understanding of the market cannot reflect the full face of the market. From this point of view, the opinions of each of us are nothing more than all kinds of prejudices in the face of the market. And only when your opinion can be infinitely close to the true face of the market, can it be called a real "opinion".
The limited understanding of the true face of the market will inevitably lead to trading errors. Therefore, in trading, making mistakes is an inevitable thing, but we can reduce the probability of making mistakes by deepening our understanding of the true face of the market. If you want your cognition to be infinitely close to the true face of the market, you must integrate yourself into the market and feel the pulse of the market. As the saying goes, don't go into the tiger's den to get the tiger. Only by constantly experiencing the evolution of the market in actual combat and observing the reaction of the price can we have a deeper understanding of the true face of the market and improve the understanding of the true face of the market.
When your cognition is infinitely close to the true face of the market, it is also a moment when the market judgment is more accurate, and it is also a moment of daring to place heavy bets, or a moment to increase positions on the correct position. However, our cognition will not always be close to the true face of the market, so the decisions made are often contrary to the market, and the mistakes at this time should be bravely admitted, and the action should be decisive to leave. On the contrary, for those investors who end hastily when the market judgment is correct, or who insist on sticking to the market judgment when the market judgment is wrong, it is a major mistake in cognition, because he does not recognize the limited nature of people's cognition.
Therefore, only by acknowledging the limitations of cognition will you be able to face mistakes calmly, face losses, and regard losses as a very normal part of trading. Cognition can not be close to the true face of the market, we must change the cognition, do the thinking that conforms to the true face of the market, and at the same time, the mistakes made and the losses caused by cognitive prejudice must be dealt with accordingly. Stop loss is how it comes from, it is a cognitive requirement, not a stop loss for the sake of stop loss. When the cognition and judgment are close to the true face of the market, it is necessary to continue this cognitive judgment, and at the same time, the correct position should continue until the cognition deviates from the true face of the market, and it is necessary to leave the market in time to prevent most of the profits from retracing, and the take profit is how it comes. Then start again, recognize the market, and make the next trade.
Due to the weakness of human nature itself, even if many investors have felt the arrival of major opportunities or the arrival of red flags, they are still indecisive and do not have the courage to enter the market decisively or leave the market. It is necessary to establish strict trading guidelines to prescribe their own cognition and execution, and make up for the weakness of human nature when facing the market.
In the face of the temptation of a "profit" word, the weakness of human nature is exposed, there is no defense, and it cannot withstand the impact. The so-called gentleman loves wealth and has a way, we must not only go for profit, but also find a sword to cover the weakness of human nature, in order to find the only way to choose wealth.