If you have enough guts to be a great person, this idea will eventually change your life. The same is true for traders, you must go forward bravely and dare to pursue the ideals in your heart.
- "Gift of the Ghost"
In foreign exchange trading, we often envy trading masters. They have profound trading techniques that ordinary people cannot master, and have extraordinary profit results.
So whenever the editor introduces the successful experience of trading masters to you, everyone is looking forward to learning profound skills from the masters.
However, after reading the successful experience introductions of many trading masters, it is often found that there are not so many profound trading techniques, and successful trading masters often use those techniques.
Then why are those technologies profound and profitable in the hands of master traders?
The editor below will take a look with you. The opinion of a senior trading master in the foreign exchange circle is full of dry goods, and I believe it will be helpful to you.
First of all, there are three elements in the trading market: the market, funds, and traders.
The market can be regarded as a collection of all traders, and funds are the ammunition used to support traders to express their views on market trends.
Masters often use three types of management: market management, fund management, and self-management
Trading technology or market management: that is, the sum of trading methods that analyze market trends, determine trading varieties, and timing of entry and exit.
Fund management: the art of fund allocation, position control, overweight and stop loss setting.
Self-management (self-discipline): It is about the trader's own mentality cultivation and emotional control.
Among them, trading technology is always the first, it is like the eyes of traders. A blind man in the trading world, no matter what he does or does in the trading market is wrong.
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The ability to read candlestick charts is the only ability a trader needs. Traders who cannot judge trends and read candlestick charts cannot make profits.
The requirements for trading techniques are: 1. Atmospheric, 2. Sophisticated, 3. Concise.
Atmosphere: It is enough to track the most macro trends, such as realizing the trend tracking of the monthly chart;
Fine: It is enough to track the most microscopic trend, such as realizing the one-minute K-line chart trend tracking;
Conciseness: It means that the trading technology should be condensed into a highly refined trading system, and traders are proficient in trading completely according to the in and out signals sent by the trading system.
Traders must go through a process of learning trading techniques from simple to complex, and then from complex to simple.
As far as trading techniques are concerned, simple ones are not necessarily correct, but complex ones must be wrong. Because in the trading market, complex transactions are almost equivalent to "uncontrollable risks".
01
Trading strategies, trading rules, trading plans
Trading strategies and trading rules are highly condensed of the three managements, a summary of the life experience and lessons of senior experts, and they have exchanged for long trading years, astronomical losses and even lives.
Young post-scholars have no choice but to fully respect, comprehend and practice hard.
The trading plan is the joint operation program of the three management, trading strategies and trading rules, and traders must attach great importance to it.
The trading plan is preferably written in nature, so that it looks clearer and easier to compare with the trading summary. The trading plan mainly determines the direction and nature of the transaction.
Take foreign exchange trading as an example:
For medium and long-term trading, the trading direction can only be consistent with the long-term trend indicated by the monthly chart, the medium-term trend indicated by the weekly chart and the short-term trend indicated by the daily chart.
Timing of entry: jointly determined by the large cycle trading system and the small cycle trading system;
Timing of entry: only determined by the large-cycle trading system.
Common large-cycle trading systems include: 5/10/20 daily moving average trading system and K-50 trading system;
Common small-cycle trading systems include: 1-minute K-line chart trading system;
Generally speaking, the day when the short-term trend direction indicated by the daily chart changes is the time when the large-cycle trading system sends a signal to close positions.
If it is short-term trading, the timing of entry and exit is determined by the small-cycle trading system.
02
Why are trading masters invincible?
They first solve the problem of selection of trading symbols. There are two principles to follow when choosing a trading product:
The first principle is "don't do unfamiliar trading varieties": that is, the technical trend of the market involved must be able to be included in his technical analysis framework.
The second principle is "don't do inactive trading varieties": because the more illiquid the market, the easier it is for the price movement to be manipulated, and rashly participating in the trading of this kind of trading varieties is tantamount to throwing yourself into a trap.
Therefore, it is better to choose trading varieties for foreign exchange trading with good liquidity, active price changes, and real and natural trends.
In foreign exchange trading, individual traders can choose "EUR/USD", because this currency pair has relatively large trading volume and open interest, and has strong liquidity.
In theory, if the trading technique precisely solved the problem of timing entry and exit, money management and self-management would be completely unnecessary.
This is like a reason why a swordsman with infinite martial arts can kill all opponents. But in fact, there is no swordsman with infinite martial arts, no matter how powerful a person is, he will encounter an opponent of equal strength.
In the same way, no matter how great a trader is, his trading skills are limited and flexible.
for example:
Trading technology can clearly tell traders that a certain currency pair will rise sharply or plummet sharply, but the time may be very fast, or it may be delayed for a long time, long enough to make all those who wait lose patience and confidence.
In terms of path selection, a large-scale trend may be unilateral and complete in one go, or it may be a "declining channel" or "ascending channel" with twists and turns.
If you do not do a good job in fund management and blindly trade with heavy positions, even if you look at the general direction, you will be wiped out in a small price retracement.
In the foreign exchange margin trading with leverage effect, if you trade heavily or blindly increase your position with profits, the probability of liquidation is 100%.
Trading masters have profound trading techniques that are difficult for ordinary people to master, and their core secrets are:
1. Combining large-cycle K-line charts with small-cycle K-line charts.
2. On the same K-line chart, he pays attention to three key points:
1. K-line and K-line shape and position relationship;
2. The shape and position relationship between the K line and the moving average;
3. The relationship between the moving average and the shape and position of the moving average.
besides:
A master trader always trades in the direction of the mid- to long-term trend, and he will not let down his vigilance against short-term reverse fluctuations.
Not only can he correctly analyze the direction of long-term, medium-term and short-term trends, but he can also clearly perceive the more essential things hidden behind the trend: the comparison between the strength of long and short forces and the growth and decline between them.
Only play when "all conditions are in its favor", and at other times just watch and wait.
Trading masters often don't think that they are better than the trading system, so he trusts the trading system more than he trusts his own feelings.
The biggest difference between a master trader and ordinary people is that he has no greed, no fear, no arrogance and no discouragement. When he advances, he advances, and when he retreats, he retreats.
He not only has excellent self-management ability, but also has a reasonable fund management plan.
Let me introduce to you what the model of the commonly used fund management scheme looks like.
Divide the total funds into three parts:
The first is called the "Living Reserve Fund Outside the Trading Account"
The funds in this account will never be used for transactions, and are used to store other income other than transactions and the continuous export (withdrawal) of transaction profits.
The second is called "off-market transaction reserves"
It is stored in the bank account associated with the trading account. Although it can be easily transferred to the market, it does not participate in daily transactions unless it is very necessary (this one can be canceled if the funds are insufficient).
The third is "trading funds in the market".
This part of the fund is divided into four parts:
The first one is called "Pioneer", which is specially used to open positions tentatively. When the "vanguard" is frustrated and the small-period trading system sends out a reverse trading signal, either directly stop the loss and close the position, or use the other quarter of the funds to open a position with the same amount in reverse and lock the original position.
This way, no matter how the price fluctuates, the trade loss will be locked in as the difference between the two opposite positions.
Then wait and see the result of the long-short fight, and when the outcome has been determined and the trend is clear, use the last two-quarters of the funds to increase the correct position.
03
Laws of Losing Trading vs. Laws of Winning Trading
By summarizing a large number of loss-making transactions, including others' and your own, here is a formula called "Law of Losing Transactions" and "Law of Profitable Transactions" for your reference:
Loss trading = [buy high and sell low or sell low and buy high + close loss position too late + close profit position too early] × large proportion of heavy position trading or high ratio leverage trading (that is, "excessive trading") × no certainty, no chance of winning Forced trading × unrestrained, frequent trading without general direction.
Profitable trading = [buy low and sell high or sell high and buy low + close the loss position as soon as possible (that is, "cut off the loss") + let the profitable position fully develop (that is, "let the profit run"] × position ratio or leverage ratio that is proportional to the odds of winning × The appropriate number of transactions under the guidance of certainty rules × The appropriate number of transactions determined by the direction of the medium and long-term trend.
The so-called buying high and selling low or selling low and buying high can be divided into two situations: one is at the daily, weekly or monthly level, and the other is at the time-sharing level.
Take my earlier trades for example:
Although it is not difficult to buy low and sell high or sell high and buy low on the daily, weekly, or monthly level, it is often chasing long or short at the time-sharing level, which leads to short-term trading on the time-sharing chart. If you are long, you will fall, if you are short, you will rise. This phenomenon has resolved itself after I started to pay attention to the "small cycle K-line chart".
If there is a phenomenon of buying high and selling low (going long in a downtrend) or selling low and buying high (shorting in an uptrend) at the daily, weekly or monthly level, it is usually caused by a lack of ability to identify trends . It can be solved by improving trading technology.
Pay attention to the three enemies here: they are excessive trading, forced trading and frequent trading.
The so-called excessive trading: it means that the proportion of the position is too heavy or the leverage coefficient of high ratio is always used, which leads to excessive risk taking.
The so-called forced trading: It means not considering the certainty before trading, and trying to make a profit without grasping the chance of winning.
The so-called frequent trading: refers to excessive and excessive trading without restraint and no sense of direction.
Excessive trading, forced trading, and frequent trading all refer to a type of person that I call a "traderaholic," where:
Excessive traders: They like to enter and exit large sums of money. Whether they are operating 10,000 yuan or 100 million yuan, they want to invest every penny, so they always feel that the money is not enough. Or more accurately, no amount of money is enough for them to lose money.
Forced traders: They enter the market no matter whether the market conditions allow it or not. They are unwilling to wait for the "big time" to arrive, or they are already deeply mired in the quagmire long before the "big time" arrives.
Like frequent traders, they would rather lose money than discipline themselves to stay on the sidelines.
The latter two types of people can neither take short positions, nor are they willing to simply hold profitable positions to allow profits to fully develop. What they like is to keep trading and trading until they lose all their money.
None of these three people has any chance of becoming a great trader unless their behavior patterns are changed.
04
Why do ordinary people fail?
The following is a detailed list of various phenomena and reasons that lead to trading losses. These reasons correspond to the problems that traders have in trading technology, fund management or self-management.
There must be a lot of problems. Here I have selected a few classic ones to share with you:
▌1. Self-casting: choose the wrong trading product, and operate rashly in unfamiliar currency pair transactions.
▌2. Lack of direction: Lack of the ability to judge the macro trend of specific trading varieties, unable to read monthly charts, weekly charts and daily charts (the method is exactly the same as analyzing the market index).
Trade against the trend on specific operating varieties, that is, go long in a downtrend or short in an uptrend.
The correct approach should be: go long in an uptrend, short in a downtrend, and short in a no-trend market.
[Note]: The trend here is at least the short-term trend indicated by the daily chart, and the direction must be consistent with the medium-term trend indicated by the weekly chart and the long-term trend indicated by the monthly chart.
▌3. Lack of patience: violating the "rule of holding profit"
That is, "the long-term and medium-term positions shall not be closed if the large-period trading system does not send out a closing signal, and the short-term positions shall not be closed if the small-period trading system does not send out a closing signal."
Although they can identify major trends, they lack the ability to move like a mountain, and lack enough patience and confidence. They always end profitable positions prematurely and deprive them of the opportunity to fully develop.
Traders must establish a large-cycle trading system based on the large-cycle K-line chart (such as the daily chart) as the basis for medium and long-term entry and exit.
▌4. Unbearable to stop loss: Violation of the "stop loss rule"
That is to say, "the large-period trading system immediately closes the medium and long-term positions when it sends out a closing signal, and the small-period trading system immediately closes the short-term positions when it sends out a closing signal."
Lack of the ability to face reality, either due to the inability to recognize the trend or illusions, always closes the loss position too late, resulting in a small loss that eventually turns into a catastrophic consequence.
▌5. Frequent trading: Lack of ability to distinguish between temptation and opportunity,
Fear of missing opportunities, even thinking that opportunities are everywhere, lacking the ability to get out of the evil temptation of "day clutter", leading to "frequent transactions" without restraint and no general direction.
The result of frequent trading is the same as that of forced trading, that is, multiple small losses turn into big losses.
▌6. No benefit, no harm: Violation of the "law of simplicity and compliance first", including the "law of exit when expectations fail" and "law of surrender in difficult situations".
Simple: refers to the concise and refined trading system;
Yi: It means that the easier the profit is, the better the transaction is;
Softness: It refers to lowering one's body and keeping one's mind open and flexible;
Shun: It means that traders must have a completely objective spirit, everything is market-oriented, and they follow the market.
▌7. I don’t know how to increase the price: Violation of the "law of robustness", including the "law of Xiaocang's trial" and "law of overweight with the trend".
The former is to act as a "vanguard" with a small amount of funds to avoid falling into excessive trading at one time, and the latter is to expand the results of the battle when the situation has proven to be beneficial to itself.
However, please note that there must be restraint in increasing the price according to the trend, please refer to the introduction in the previous "fund management" section.
05
at last
A person's destiny is actually one's own courage and courage. As long as one moves toward one's own will, one's destiny will sooner or later convert to one's will. When people resolutely carry out their will, fate is close to the resolute.
It is impossible for us to become a master trader all at once, but as long as we are willing to learn and try with our heart, we will always be closer to a master trader than others. I hope today's article can help you avoid detours in future transactions.
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I hope this article can make foreign exchange traders get out of the confusion when they are in confusion. Old rules, if you haven't understood it, please bookmark it first! Welcome to leave a message to communicate with the editor!
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