01
Most people have an innate desire to bring out their best potential, to be at their best. This, coupled with the fun of trading itself and the temptation to make money, arouses traders' fighting spirit to beat the market.
02
Excellent traders are mostly hardworking and shrewd people. They are open to new ideas, on the contrary, the purpose of their trading is not to make money, but just to do well. If you do it right, you will naturally make money. Successful traders are always perfecting their skills and reaching their best is more important to them than making money.
A successful trader is a realist. He knows his abilities and their limitations. He understands what is going on in the market and knows how to respond. He has to analyze the market comprehensively, observe his own reaction, and formulate a realistic operation plan. Amateur investors cannot afford fantasy.
When talking to hundreds of traders, I often hear some common fantasies. They always distort reality and wander on the road to success. Successful traders must be aware of their illusions and work hard to shake them off.
03
People who lose money lose money not because they have too little money, but because there is something wrong with their heads. For people who lose money, more funds lose as fast as less funds. Because they operate too frequently, their money management is too bad, and their risk is too high, and these have nothing to do with the amount of money. In this case, no matter how good their trading system is, a few wrong trades in a row can cost him everything.
Amateur investors either expect to lose money or are preparing to lose money. The small amount of funds is just an excuse that prevents them from recognizing two facts: first, they lack operational discipline, and second, they lack a realistic fund management plan.
If you could buy a successful automated trading system, you could emigrate to Tahiti for the rest of your life as the brokerage firms kept sending you checks. It can be seen that the only ones who can profit from the trading system are the system sellers. Although the trading system market has a small capacity, its profits are considerable. Come to think of it, if their system really works, why sell it? They can immigrate to Tahiti and just sit back and collect the money!
04
There are three basic elements of trading that every winner must master: a healthy mind, a logical trading system, and a good money management plan. These three basic elements are like the three legs of a stool. If one leg is taken away, the stool will overturn with people. People who lose money tend to pay too much attention to the trading system and always want to build a stool with one leg, or at most two legs.
Transactions must be based on clear and well-defined principles. When trading, you must analyze your feelings to be sure that the decisions you make have a sound basis, and at the same time design a money management plan to avoid suffering a series of losses and getting out.
For decades, the cycle of the U.S. stock market has generally been around 4 years. For example, there were major bear market lows in 1962, 1966, 1970, 1974, 1978, and 1982. A complete market cycle generally has a rising period of 2.5 to 3 years and a falling period of 1 to 1.5 years.
Trading is a difficult game. For a trader to be successful in the long run, he needs to be serious. If you are not seasoned, or if you trade under the driving force of certain emotions deep inside, it will lead to devastating consequences.
Unfortunately, impulsive people, gamblers and those who feel that the world owes them are more likely to get hooked on trading. If you're trading because you're excited, there's more chance of bad luck and therefore more risk. The market will not forgive you, and emotional trading always leads to losing money.
05
There are three types of people who gamble: normal people who gamble for entertainment and who can stop gambling at any time; professional gamblers who use gambling as a job to earn a living; neurotic gamblers who gamble because of subconscious needs and cannot stop.
Neurotic gamblers either feel lucky or want to try their luck. After winning, he felt great and happy, just like a baby getting milk. The neurotic gambler loses all the time because he focuses on experiencing the thrill of good luck instead of focusing on making a realistic long-term game plan.
Buying and selling stocks, futures and options gives gamblers a high, but it does seem a lot more respectable than betting on horses. Also, there is a sense of inscrutability to gambling in the financial markets that seems more intellectually interesting than horse racing purely numbers.
Gamblers feel happy when their trades turn out in line with their expectations, and depressed when they lose money. They are very different from successful professional speculators. Professional speculators pay more attention to long-term plans, and they don't feel particularly depressed or excited during the transaction process.
06
The central hallmark of neurotic gambling is the inability to resist the urge to gamble. If you feel that the number of transactions is too frequent and the results are bad, then take a month off. This will give you the opportunity to re-examine the trades you have made. If the urge to trade is too strong to hold off for a month, go to your local Gambler AA meeting or use the rules of AA.
A person's mental state formed from childhood can prevent him from being successful in the market. In order to adapt, you have to find your weaknesses. For this reason, we must insist on keeping an operation diary-recording down the reasons for each transaction, and summing up those operation modes that have repeatedly succeeded and failed repeatedly. Qilehui's original "Financial Trader Growth Manual" is a tool to record our growth gains and losses, purchase WeChat ID: qilehui05
Every trader wants to beat the other; every trader gets attacked by the other. Littered remains litter the trade highway. Trading is the most dangerous human activity, more dangerous than war.
Buying at the high point of the day is like driving your car into the street with the door staggering open. When your order to buy hits the floor of the exchange, traders scramble to sell it to you—pushing open your car door and tying your hands. Other traders want you to fail because they can only win when you lose.
Your state of mind is instantly reflected in your account. Maybe you have a great trading system, but if you feel scared, arrogant or regretful, then you will definitely lose money. Stop trading as soon as you become aware of a frenzy or fear flashing through your head. Your success or failure as a trader depends on your ability to control your emotions.
07
When trading, you are dealing with the smartest people in the world. The battle starts out against you. If emotions interfere with your trading, the war is over early.
You are responsible for every transaction you make. Once you decide to enter the market, the transaction begins; only when you decide to liquidate and sell, the transaction ends. Having a good trading system is not enough. Most traders have great trading systems but eventually get wiped out by the market because they are not mentally prepared to win.
There are countless temptations in the market, just like walking through a vault. The market induces a greed for more gains and a great fear of losing the gains already made. Greed and fear influence our perception of opportunity and danger.
Most amateur investors think they are geniuses when they make a small profit. It’s exciting to know that you’re so awesome that you can be successful without following the rules. This is when traders often start to forget established principles and go into self-destruct mode.
Traders have some knowledge, the trade is successful, their emotions are also mixed into the trade, and the result is self-destructive. Most traders quickly return the money they make to the market. The market is full of get-rich-quick stories. A trader's success lies in his ability to accumulate wealth gradually, not how much money he makes all at once.
08
You want to trade as objectively as possible. Write down all your transactions, attach price charts before and after the operation, list all transactions on a piece of paper, and list commissions and transaction spreads at the same time, and strictly adhere to the principles of fund management. It is necessary to spend as much time analyzing yourself as you spend time analyzing the market.
I insist on reading, trading, and paying attention to perfecting the system. I also do psychoanalysis. It never occurred to me that psychoanalysis had anything to do with trading—until I had an epiphany. The ideas that changed the way I trade came from psychoanalysis.
Making money makes traders feel good and it lifts their spirits. Wanting to get emotional again, they make some sloppy trades, only to give the money back to the market. Most traders cannot bear the pain of consecutive large losses. The few survivors realize that the problem is not their trading methods but their thinking. They can change their minds and become successful traders.
A loss is to a loser what alcohol is to an alcoholic; a small loss is like a drink; a large loss is like a binge; a series of losses is like an alcoholic drinking. People who lose money are constantly running between various markets, gurus and trading systems. Just as he was about to re-experience the thrill of winning, his assets were shrinking.
Alcoholism is a treatable disease, and likewise losing money is avoidable. This would change if the loser tried to adopt the principles of Alcoholics Anonymous.
09
Successful traders view declines like occasional drinkers view alcohol, and they have enough. If you have several big losses in a row, you will think something is wrong: you need to stop and rethink your analysis or method; people who lose money can't stop, they keep trading because they are addicted to it, always thinking make big money.
A well-known trading advisor wrote: Trading brings more pleasure than sex or jet-setting. People who lose money want to bet big as they lose more, just like an alcoholic who develops from occasional drinking to alcoholism. They can't tell the line between business risk and gambling. Many people who lose money don't even know there's a line between the two.
The loser has the urge to trade, just like an alcoholic wants to drink. They trade impulsively, enjoy trading, and always want to find a way out.
The loser keeps losing money. Most losers are wiped out by the market, but some lose their own money and turn to managing others; others turn to consulting services, like a penniless drunk washing glasses in a bar.
Most losers hide their losses. They keep throwing money back and forth, have a bad track record of making money, and pay the price difference in large sums. Just as an alcoholic doesn't want to know how much he drank, a loser doesn't want to know how much he lost.
The losers have to suffer big setbacks before they start breaking even.
Only very few traders set out to improve. For these very few, the pain of a major setback will help them break out of the vicious circle of winning and losing. When you admit that your problems are causing you to lose money, you can begin to create a whole new trading life. You can begin to design a winner's discipline.
Using the principles of Alcoholics Anonymous, a trader can turn around for the better. A recovering alcoholic struggles to stay sober, one day at a time; now, you have to try not to lose money, one day at a time.
010
You might say it's impossible. What if the market suddenly turns down after you buy in? What if you sell short at a market bottom and the market bounces back? Even the best traders lose money sometimes.
The answer is to draw a line between business risk and losing money. Traders must take business risk, but are not allowed to take more than predetermined risk.
If you close the deal within the set business risk, it's normal business. Don't haggle, don't wait until the next time your stop is hit, and don't expect the market to change. Losing even $1 more than the set risk limit is like an alcoholic who gets drunk, gets into a fight, comes home with a stomachache, wakes up sleeping in a ditch with a sore head—never Don't let this happen.
Trading within the confines of business risk is like living without booze. A trader must admit that he is a loser, just as a drunk must admit that he is an alcoholic before he can begin his journey to recovery.
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