It is estimated that everyone has had this experience: this time I bought it right, and the price went up; Mentality, self-confidence, change in the mistakes that I think.
Van Tharp wrote in "The Road to Financial Freedom": "Most successful traders only have a 35%-50% success rate, and they succeed not because they can predict prices well, but because they The size of their winning trades is far greater than the size of their losing trades. It requires a high degree of self-control.”
It is surprising that most successful traders only have a 35%-50% success rate. So, what's the right deal? What is a wrong transaction? Is it the correct transaction to only go up when you buy it, and go down when you sell it? Is it only right to trade if you successfully catch the bottom and escape the top every time?
1. The characteristics of right and wrong
1. Relativity
In trading, we often see that many investors have been holding loss-making positions while profit-making positions are running very fast. This phenomenon is very common, but this is not because investors are irrational, but because they cannot determine right or wrong. A very clear standard of right and wrong.
However, why didn't he have a standard for judging right and wrong? Because in the trading market, right and wrong have characteristics that no other market has, that is, right and wrong can be converted very quickly in the trading market, so fast that there is no time to react, and a transaction may be profitable a minute ago , but it may become a loss one minute later; it is also possible that a profitable position today will become a loss the next day. This kind of rapid conversion of right and wrong is unique to the trading market, and it is also an essence of the trading market and other markets the difference.
2. Timeliness
In addition to being extremely relatable, right and wrong also have a strong timeliness. Any transaction, whether it is profitable or losing, has an effective time limit. If it exceeds this time period, right and wrong will be reversed. This is still obvious in the stock market. Unwilling to stop losses, but forced to hold for a long time, in order to wait for the emergence of the next profit cycle.
However, in the foreign exchange market, due to the margin system and overnight interest, investors cannot hold positions for a long time, and are often forced to lose money when they cannot wait for the profitable period. The timeliness of right and wrong has led to the research on the time cycle in the market, and formed a special cycle theory, so that investors can not only grasp the market from the price, but also grasp the market from the time, and make the transaction to a higher level .
3. Continuity and indivisibility
The transaction itself is composed of profit and loss, right and wrong, and there is no such thing as a transaction with only profit or loss. In trading, right and wrong are continuous and inseparable. This continuity does not refer to continuous profit or loss, but right and wrong appear alternately, and will always be like this, with continuity.
At the same time, right and wrong are inseparable, just like the front and back of a piece of paper. No one can always make profits or losses, and no one can separate profits and losses. Only when you truly understand that losses are normal and inevitable, can your trading mentality remain calm, and you will not be afraid of the market and unable to trade as planned.
2. How to deal with right and wrong
Once any investor loses money in the transaction, not only the funds in his account will be lost, but also his self-esteem will be hit at the same time. If he can't understand the loss correctly, he will feel self-blame; if he loses continuously, he will even have an inferiority complex, and then he will enter a state where he cannot make mistakes.
1. Set your own standards
What you first formulate is a right and wrong standard that adapts to yourself, not to the market, because it is impossible for the market to give you a clear and definite standard of right and wrong at any time. Is it wrong to enter the market and get caught in the result? In fact, as long as the transaction is less than the stop loss point, it is still in the correct state.
Right and wrong cannot be judged by the profit and loss, but by the quality of the profit and loss. If you make a mistake, it is only right to make a small loss, and if you do it right, you will make a big profit. Otherwise, it is wrong. The judgment standard of right and wrong is actually how to set up the stop loss point and whether it is strictly enforced. How to set up the stop loss point is a problem that varies from person to person, but strict implementation is a discipline that should be generally observed.
2. Allow for mistakes
If you do not allow yourself to make mistakes in trading, you will either be very careful in trading, highly nervous, and difficult to balance your mentality, or you will not admit your mistakes once you make a mistake and make a big mistake. This is a big taboo in trading. Losses are a very normal thing in trading. You should regard appropriate losses as the price and cost you must pay to make a profit. Opportunities are found out, not at a glance. Thinking without paying a price Success is fantasy!
3. Observe discipline and implement standards
Observing discipline and strictly implementing your own right and wrong standards are the prerequisites for correcting mistakes and making profitable transactions. After entering the market, the only thing you need to do is to use your judgment standard to judge whether to exit or hold. Once the stop loss point is hit, the only thing you can do is to exit the market.
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