The purpose of trading is only to make profits, but losses are often inevitable. Regarding profits and losses, our mentality is very important! Very important! This involves "preserving the country" and "making a comeback"
#After a profitable transaction, when a person is able to make stable profits, it is easy for him to become self-paralyzed and forget about everything. A dangerous signal appears! Be careful!
1. At that time, you cannot expand the position at will (increase the amount of funds for the transaction)! Positions must be increased in a timely and proportional manner.
2. Surplus accumulation must be withdrawn in a timely and proportional manner.
3. We should still take good measures to deal with risks as always.
People often talk about money management, but in fact what really needs to be solved is mentality management. Only with a reasonable and correct mentality can you control your innate greed; only by effectively controlling your greedy nature can you control your capital investment; only by effectively controlling your greedy nature can you control your capital investment. Only by controlling your capital investment can you "keep what you have built" and gain eternal life in the trading market.
#After trading loss
1. At this time, it is easy to have a revenge mentality, and often a mentality of eagerness for revenge. A dangerous signal appears!
2. Never expand your position at will (increase the amount of funds for the transaction)! Effective position adjustments must be made in accordance with trading rules.
3. The reason for the loss must be checked to determine whether it is caused by "random operation" of the transaction or a reasonable loss (that is, a blind spot that the trading system cannot take care of).
After making a profit, you must stop trading until you have reasonable trading rules. Otherwise, you will be completely defeated and die without a burial place!
After a loss, you don't have to have a fearful mentality. As long as you maintain a reasonable position and continue to strictly implement the rules, you will soon get the capital curve to turn upward.
The management of mentality, the idea of using probability to ensure profit in the entry and exit positions of transactions, can make you no longer hesitate when encountering such a position.
The management of mentality, when it comes to the amount of funds invested in the transaction, uses the risk ratio (financial leverage) of each transaction type to define your position, so that you will not change the weight of the position at will, because you understand that once the weight of the position is changed, It means changing the risk ratio and the original (due) statistical probability of the trading system. In this sense, I have repeatedly insisted on opening positions in one go. Because adding or reducing positions midway changes the profit probability of the trading system. Only those who do not understand probability constantly use the method of adding or subtracting positions.
To put it bluntly, isn’t it subjective to add or reduce positions? Have people who add or subtract positions ever calculated the probability of success and failure in adding or subtracting positions? No! Because there is no such statistical standard at all (unlike the moving average, which has an objective standard)! They are all adding or subtracting positions based on subjective feelings. This is caused by not managing your mentality well.
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