First of all, it is necessary to define what is a stable profit, but because novices do not have the ability to make a stable profit, the stable profit they imagine is just like farmers imagining the emperor digging the ground with a golden hoe, and their vision is limited.
When I was a novice, my understanding of stable profits was to find a formula for making money in the market, and to keep making money every day or every week or within a certain period. At that time, I had a good idea. When I found it and could make a stable profit, I would expand my principal to do business, compound interest, and I would soon be able to make a lot of money.
Many people judge others to be stable and profitable, just to see whether his past record can keep making money within a certain period of time. But the past record is history, how can we deduce that this kind of stable profit can be maintained in the future?
Looking at the past record to analyze is like we do technical analysis on the disk. The disk is history, something that has already happened. How can we predict the future by analyzing history? You cannot deduce the future, so your stable profit can only represent the past, not the future.
So what is the real stable profit?
Stable profit is a stage of learning to trade.
In the development of things, there will be several stages of germination, development, climax, decline, and death. Learning to trade, the normal progress, also has several stages, sudden loss, slow loss, no loss and no profit, stable and small profit, risk control sudden profit, stable sudden profit, this is what small capital learning has experienced. After passing the stage of earning a lot of money with small funds, it will enter the learning stage of trading with large funds and start a new cycle.
Reaching a new stage with four pillars
One is to have the corresponding market and transaction understanding at this stage
The second is to implement the method of understanding
The third is the corresponding record
The fourth is faith.
The first pillar is the end of the previous phase and the beginning of the new one. This is the root of the trading method. If there is no corresponding understanding, only the methods and achievements of the corresponding stage are usually brought up by the master. Although he has achievements, he will still be trembling with transactions. Their beliefs are not enough, and when the market changes, they don't know how to change. But what follows is a matter of time.
The second pillar is the implementation of knowledge. If there is no method, only understanding, it is easy to become mere talk. Others sound and feel reasonable, and will be overwhelmed by his deep understanding. But there is no method to implement, behavior and understanding will be contradictory. For example, when I talk about the concept of winning by the ratio of profit and loss, the idea of implementation is to cut losses and let profits run. Anyone can say this sentence, but when looking at the transaction records, many people's orders either carry the big losses, or they can't run far. Floating profits .
If you can't do it, what should you do? Many people think that their inability to do so is due to their lack of psychological quality, and they always blame themselves for not being able to get out of it, and feel that they are hopeless. In fact, at this time, you need crutches, and you can walk with your own mental quality, until you have a deep understanding, or the behavior becomes a habit, you can get rid of the crutches. The crutches are the means of implementation. If it cannot be implemented, further implementation is required.
Cut losses and let profits run. Those who have read "Getting Started" know that I can't do the same. What kind of thinking did I use to further implement it? Small cycle stop loss, large cycle stop profit. It is not enough to implement this idea, and it needs to be further and more specific, such as small cycle, stop loss, etc., and how to express it with tools. It is very clear from the understanding to the implementation. The ultimate goal of implementation is not necessarily completely clear, and the completely clear path is mechanized transactions. The way of subjective trading will be to have a clear skeleton structure that fits the constant outside world, and a fuzzy outer layer operation to deal with the changeable outside world.
The method is a bridge between the understanding of the market and transactions and oneself. The "self" is diverse, so the method has both commonality and individuality. The "commonality" of the methods is easy to find, but the "personality" of the methods needs to be honed out in practice.
The third column is record. Cognition and methods are both products of subjective consciousness and belong to theory. Theory guides practice, practice verifies and improves theory. The essence of trading profits is that our subjective consciousness matches the objective fluctuations, and the rewards given by objective fluctuations. The record is to verify whether the trading theory conforms to the objective fluctuations. If a trading theory conforms to the objective laws, it must sometimes conform to the objective fluctuations.
The fourth pillar is faith, confidence. Faith comes from achievements. If you have an undefeated record for a long time, you will have the belief in being undefeated. If you have a stable and profitable record for a long time, you will have the belief in stable profits. You will feel that no matter what the market goes, you can do it.
Many people, including me who didn't understand trading thoroughly, have many misunderstandings about stable profits.
The first misunderstanding, "Stable profit is profitable every week and every month"
Positive answer: Is it necessary to be profitable for a certain period of time? Weekly and monthly profits are appearances. Advance-adjustment-advance is the normal state of stable profitability. It doesn't matter whether a certain period is profitable or not. A person with stable profits can make a capital curve with stable profits. Most of the time the record can also naturally show weekly or monthly profits.
The second misunderstanding, "The understanding of other people's stable profits is that this person has mastered the profit formula of the market, and after setting the formula, the money will come."
Positive solution: The profit formula understood by novices, in the eyes of veterans, is a method of implementing understanding. Like a weapon or a knife, only the owner of the knife knows where to use the knife to achieve the effect. Others do not have the ability to use the knife, so they can't use this profit formula well.
The third misconception, "To judge whether someone can make a stable profit is to see whether his past record makes money every month; many people will also have doubts. The record is history, which only shows that he was stable in the past. But the future is not Sure, from the past record, how can it be deduced that he will also be able to make stable profits in the future?"
Positive solution: record is history, just like technical analysis, technical analysis can only analyze the price that has occurred, explain what the price is in the past, it cannot explain what will happen in the future. What can lead us to see the future is the hidden law/logic in history. Only law/logic can lead us to see the future.
The historical record of stable profits may contain the logic of stable profits, or it may be just a moment of luck. I don't know why I make money, so I can't know whether I can make money in the future. If you know why you make money, you can also deduce your future.
For me, when there is a stable profit record for a period of time, it doesn't take long for me to know whether I have the ability to make stable profits. Because this record is a testament to the way I know it, it doesn't take long.
The fourth misunderstanding, "This person can make a stable profit, why doesn't he use debt to trade? Wouldn't he be financially free immediately after borrowing?"
Positive solution: A stable and profitable state is established within the boundaries of one's own capabilities. Outside the boundaries of capabilities and out of control, stable profitability will disappear.
Just like you learned to ride a bicycle, on a normal road, stable riding is within your ability, but someone tells you to ride a bicycle on the edge of a cliff, you can’t bear the fear of the cliff, this is beyond your ability and your ability to ride steadily is gone. So if you want to ride stably, then you only do what is within your ability and ride on normal roads.
Borrowing heavily, exceeding one's own risk tolerance. Stable profitability is the result of risk control, not the result of strong predictive ability. Borrowing heavily has magnified the risk, but I cannot bear the risk of failure. Risks get out of control and stable profitability dies with them. Without controlling the risk side first, you are not qualified to accept the profit side.
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