Many of my students or some fans will ask me a question: What aspects should a complete trading system include? So let me talk about my personal opinion. Of course, it only represents my personal meaning, and it does not represent all. I personally think that a trading system should at least include four aspects: effective and verified fund management, trading steps, trading methods, and trading psychology. I will talk about these four aspects today. 1. Fund management: Funds are the only tool we can survive in this market. If there is no funds, it is meaningless to talk about the other three aspects. In terms of fund management, there are three common methods. The first is to open a position with a fixed number of hands. The number of hands is the same every time you open a position, regardless of whether the stop loss is large or small; the second way to open a position is to open a position randomly. I don’t recommend it in this case because of my feeling. The third method is also the fixed loss amount opening method that I often use. Suppose you have 10,000 US dollars, then the allowable loss amount for each opening position is 200 US dollars. It is a fixed loss of 2%. In this way, unless you lose 50 transactions in a row, you can cause a liquidation, but this situation is almost impossible to achieve. Look at the picture below:
In the above two figures, the number of stop loss points for each transaction is the same, and the profit-loss ratio is also 2:1, but the difference is that the number of trades is different. The number of hands in each transaction in the yellow picture is fixed at 1 lot, and the green one is based on the number of stop loss points, and then judge how many hands should be placed. Then it is not difficult to see that although the final points are all losses, our account funds are indeed clear. s difference. The yellow one ended up losing $1,100, while the green one lost 110 points, but the funds in the account finally made a profit of $1,000. Haha, isn’t it amazing? Of course, I can't say which of these two methods is better, I can only say that the method of opening a position with a fixed loss amount is more suitable for me.
2. Trading steps: There is a step in doing everything, just like we clean at home. If we mess up, it is likely to cause a lot of useless work, and even the more we clean the room, the dirtier it will be. Then our trading is the same, and we also need a trading step. My trading steps have six points: 1. Determine the trading direction; 2. Find the support and resistance level; 3. Wait patiently for the price to enter the support and resistance level; 5. Close positions; 6. Transaction summary and review. These six points need to be carried out step by step. As for how to proceed, because each trading system is different, there will also be different methods, so I won’t elaborate here.
3. Trading method: My trading method is to use the "horizontal structure" to conduct transactions without adding any indicators; above the horizontal structure, we go long, and below the horizontal structure we short. Look at the picture below:
The first thing to explain is that the horizontal structure bit is not a point, nor a line, but an area (the green rectangle in the figure above). We can see that in the figure above, the upper horizontal structural position has been suppressing gold, and once the price enters that area, it will fall. Similarly, the lower horizontal structural position has also been supporting gold, and the price Once it enters this area, it will rise until it falls below this area, and a top-to-bottom transition occurs, that is, the original support level becomes a resistance level, and gold begins to fall sharply. In the same way, if the upper resistance level is broken through upwards, gold will rise sharply.
4. Trading mentality: Many people may be relatively mature in technology and have sufficient funds, but they are still losing money. It is because I am not confident, or because my execution ability is not strong, and I cannot execute according to my own trading plan. In the end, what should be a small loss will become a big loss or even a liquidation, and what should be a big profit, only a small profit will be lost. Ran. Therefore, if your technology matures, we should strictly follow our own trading plan. If you really feel uncomfortable watching the market, then I personally suggest that after entering the market, set a stop loss and take profit, and then do some trading. For other things, distract your attention, the stop loss that should be stopped, and the stop profit that should be taken.
The above are some insights into the trading system. I use "Practical Trading Thinking", which is a set of naked K trading methods based on "Price Action Trading". If you still don't understand, please leave a comment below, or you can private message me.
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