A friend sent me a private message yesterday, and let me tell you about the journey from a novice in trading to a successful trader.
His exact words are as follows:
I have read many of your articles, and I feel that what you are talking about is indeed unique in actual combat, so please write an article about the stages of a trader from novice to stable profit. Because many people will have novice luck, and then lose money, school grade indicators, if one indicator fails, continue to change, and finally understand the probability. I don't know how to go in the future and in what direction to learn.
Everyone's growth process is different, I can only share my own process with you. The method that suits me may not be suitable for everyone. I will give this friend some suggestions at the end.
The so-called "novice halo"
This friend mentioned novice luck. In fact, I did not encounter novice luck. My first trading account was 5,000 US dollars, which was opened in "Kunlun International", which is now KVB.
But at that time, Kunlun International was far from formal, and all deposits were made into personal accounts. I remember very clearly that the first transaction was an order of EUR/USD in the morning, and I made a profit of 80 US dollars; I was very happy, my girlfriend was by my side (now an ex-girlfriend), and I told her: this is pretty good Well, I can earn this money every day, so I can invest all my money.
I still remember the expression on her face at that time, maybe she looked at this question more objectively. What happened next was very "waihui". In one month, I lost the $5,000 in my account.
A long journey of advanced trading
First: it must be a learning indicator at the beginning
The first two books I read were "Japanese Candle Charts" and "Technical Analysis of Financial Markets". At the beginning, I couldn't even figure out the four prices of the k-line "opening price, closing price, highest price, and lowest price". I have read the book Japanese Candle Chart many times. Every pass will mark some points in the book that I think are important. In the end, I copied all the important points marked in this book.
I have read the book "Technical Analysis of Financial Markets" many times. Focus on studying. The concept of trend, Dow theory, k-line shape combination and moving average.
These two books are the basis for me to build a trading system in the future. All the trading systems I have tried and used, including the trading systems that have been formed and have been in use until now, as well as the logic of establishing the trading system and the indicators used are all derived from these two books.
Fortunately, no matter how I switch trading systems and trading indicators, all the trading systems I have tried have not deviated from the logic of Dow Theory. In fact, I have been building trading systems according to the same logic. The road is not too far. That's one of the reasons why it's important for me to be able to come out of trading.
Second: try to set up a simple trading system
The earliest method was to use moving average crossover + MACD resonance; the method persisted for about two months; in fact, is this method useful? I think it is useful, but the details are not in place. Of course, at that time, there was no awareness of perfecting the details of the trading system; let alone the absolute classification of the absolute system. The trading system is too rough, the trading system itself is not executable, let alone the execution ability in the transaction process, and naturally it cannot be executed.
Many people have this experience, using very simple indicators to make a trading logic. It works from time to time. Sometimes you make money, and sometimes you lose money. When you make money, you feel that you have found the key to knock on the door of wealth. When you lose money, it will not make you extremely frustrated and desperate.
This kind of thing cannot be called a trading system, it can only be called a trading method. It can be perfected as a prototype of a trading system.
Third: The long and frequent process of switching trading systems
The method I have used the longest during this period is my own set of trading logic evolved from the book "Trend Trading Law". There are two biggest problems with the trading system: first, the process of confirming the trend requires the use of trend lines and channel lines. Both the trend line and the channel line need to be drawn on the chart subjectively. The second point is to use the K-line reversal to enter the market; the K-line reversal form cannot be fully quantified. These subjective things in trading have caused me to lose my way many times.
Use the channel line trendlines and inflection points to confirm trend reversals. You will find it in the real application. The trend line drawn by connecting two different points is different, and the same is true for the channel line. Different traders choose to connect different two points, and they will draw completely different channel lines. If you do technical analysis, there may not be a big difference between these two channel lines. But different channel lines in the transaction mean the confirmation or non-confirmation of the trend reversal. If confirmed you need to enter, if not confirmed you can not enter.
The other is the K-line reversal. There are many explanations of K-line reversal in the book, but K-line reversal has never been precisely defined; there is no standard for it. And you may even encounter in the real market, there is a very standard reversal k-line, which is wrong after entering the market; some reversals that do not seem so perfect, the k-line is indeed correct. You will get into a kind of entanglement whether to enter or not? The execution power of the transaction is gone.
Fourth: Complete the absolute classification of trading systems
This process is long and tedious; because I screened the performance of various indicators in the transaction through a large number of reviews. For example, what is the difference between the stop loss at the second low point and the lowest point? We can't just draw conclusions based on our feelings or subjective imagination. Only by putting the logic of these two different stop losses in the historical market for a large number of re-examinations. Discover the pros and cons of these two stop loss logics. Let the data speak.
The vast majority of traders will fall at this step! ! !
Fifth: Seriously implement the trading system that completes the absolute classification
Experience the decline of the trading system before achieving success. We know that this trading system is useful during the review; but what really builds our confidence is that after experiencing the decline cycle of the entire trading system, we still insist on earning back the losses when the trading system finally declined; in the end we made a profit up. Then our transaction has entered a relatively stable and profitable stage.
To put it simply, in the stock market, only after you have gone through a cycle of bull market and situation, your stock account is still profitable, and your confidence in your trading ability will change drastically.
Before I thought I could, now I really can.
I have no fear in trading because I have experienced great failures, and I have also experienced periods of success after failures. For details, please refer to the article "My Ten Years of Trading".
Finally write to this friend
If your trading system has achieved absolute classification and perfection of details. That is to say, the fourth step I mentioned above has been completed. All you have to do is to review and complete the trading system with absolute classification, and confirm that the result of the trading system is positive; after that, just execute your trading system without any distractions. As time goes by, relying on your trading system and rigorous execution, you have made profits, and your confidence has been established.
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