From the current trading system popular among institutional investors, there are mainly two modes:
The first type is the fund management and position control mode (indicator trading system) based on the traditional technical analysis method. This method mainly guides traders to make timely position adjustments through changes in different technical indicators, but the disadvantage is that technical indicators often contradict each other, which affects traders to make the right choice.
The second type of trading system is based on the modern financial risk analysis theory, using a fully quantitative and programmed position control system (intelligent trading system). Since personal emotional interference is completely eliminated, this trading system can avoid risks well.
But also because of this, this completely mechanized trading model lacks sufficient trading flexibility, and it is easy to cause large losses when extreme situations occur in the market. The author mainly talks about the related issues of the trading system from the perspective of small and medium-sized investors.
Why build your own trading system
These phenomena often appear in the market: Many traders dare not enter the market when a wave of market comes, and chase after the market is about to end, and refuse to leave the market after the market is over, resulting in being trapped; Misleading effects often lead to mistakes; there are many masters of technical analysis who can often predict the high and low points of price fluctuations, and thus make profits, but the overall trading results are not very satisfactory.
In fact, these investors have some commonality in investment, that is, the investor does not know how to deal with when his prediction is wrong? How much money should I use when I get a buy signal? When should I add to my position or when should I take a profit? Also, is the trading method he uses suitable for him? Does he have the ability to master his own trading methods? etc.
These problems can be solved with an objective and complete trading system. Why build your own trading system? There are two main reasons:
1. Self-control. There are two aspects of self-control: one is the control of human nature. When you make a profit of 20% in one transaction, do you expect more room for profit; when you are long and the market is bearish, will it affect your later transactions? The second is risk control. Losses may occur in any transaction, so you cannot bear too much loss in any one transaction. In fact, most traders who lose money are just the opposite, or do not pay enough attention to risk control.
2. The characteristics of the market. The unpredictability of the market determines that no one can accurately judge every market fluctuation in a relatively long period of time. A real data is: the top traders on Wall Street in the United States have an average transaction success rate of about 35% in ten years.
Therefore, for most investors, don't expect how high your profit rate can be, and don't expect to use one indicator, one pattern, or a mechanical trading system to achieve great success. The author once saw a formula with a price of 240,000 yuan, which is said to be able to win every battle and make a profit. But is it possible?
Problems to be solved by the trading system
1. How to deal with misjudgment? After a misjudgment, the position should be mercilessly cleared, because traders can easily make a second wrong decision under the influence of the first mistake.
2. How to set the stop loss price? Within what range is the maximum loss controlled? Before each transaction, traders should do this work well in advance, and set their own stop loss positions according to their own funds and psychological endurance.
3. When to add or reduce positions? When to take profits or continue to hold? To achieve this, the requirements for basic skills are relatively high. At the same time, traders should also compare their own personality and analysis ability, and explore the rules and make judgments after a long period of trading summary.
4. How to deal with uncertain factors in the market? The charm of the futures market lies in the uncertain factors, so traders must strictly implement the stop loss in the first time.
5. What is the expected profit target? Are you satisfied? the more you hope, the harder you fall. Therefore, we must actively think about price changes from the changes in trading volume, and we must break through our own psychological barriers for the support and pressure levels we see. Expected goals should not be set too high.
6. As the market price changes, how to revise your trading plan? Things are always developing. After the price changes, you should re-study your trading varieties, and then formulate a new trading plan.
How to build your own trading system
Many traders find it difficult to set up and use a trading system. In fact, building a trading system is both difficult and easy to say. The trading system of institutional investors needs hundreds of technical parameters to support, but there are also simple and effective trading systems suitable for small and medium investors in the market.
For example, if the stock index (price) crosses the 20-day moving average to buy, and goes below the 20-day moving average to sell, an objective, simple and effective trading system is formed. This is just an example. Investors can establish a trading system suitable for themselves in actual combat, and resolutely implement the system's buying and selling signals, so as to give full play to its advantages and effects.
The simplest trading system includes at least four parts: buying, selling, stop loss, and money management. Simply put, traders have to judge when to buy, how much to buy, what to do with the position if the market moves in the opposite direction, what to do if the market moves in the same direction, and so on.
For buying, the following four principles can be set:
1. Judging by the trend, buy in a simple upward trend.
2. Judging by the moving average, for example, short-term trading buy when the 5-day moving average crosses the 10-day and 30-day moving average.
3. Judging by the support level, you can buy after stabilizing near the previous support level.
4. Judging by various technical indicators, taking the KDJ indicator as an example, when the K line breaks through the D line upwards, you can buy.
These four principles are the basic principles of buying transactions. When one of the situations does not appear in the market, buying should not be considered at all. In addition, traders also need to establish a systematic selling principle.
For stop loss, you should also have your own principles. In fact, it is quite effective to establish a reasonable stop loss principle, and the core of a prudent self-rescue strategy is to prevent losses from expanding. At any time, capital preservation is the first priority, and making money is the second, so stop loss is far more important than profit.
From the perspective of actual combat experience, the 10% fixed stop loss method, trend stop loss method, moving average stop loss method, index stop loss method, etc. can all set the stop loss position more reasonably. Several methods are combined to comprehensively study and judge, so as to determine a more reasonable stop loss position.
In addition, "everything is forewarned, nothing is foregone", all stop losses must be set before entering the market, and breaking the stop loss price is a sufficient condition for us to leave the market. "If you keep the green hills, you are not afraid of no firewood", "If you are not afraid of mistakes, you are afraid of procrastination", when the price really falls below the stop loss price, you should implement it according to the plan and leave the market unconditionally, and you should not take chances.
Do a good job of the stop loss principle, even if the judgment is wrong, the loss caused is relatively small, but the result of not stopping the loss is often a deep lock-up, or even a huge loss.
Finally, it's about money management. This is the most basic and important link in the trading system. The author believes that the real rule of investment income is that fund management affects attitude, attitude affects analysis, analysis affects decision-making, and decision-making affects income. Fund management will directly affect several important aspects of investors:
1. Affect investors' risk control ability.
2. Influence the mentality of investors.
3. Influence investors' attitude towards the market.
Problems that should be paid attention to in the trading system
1. "Suitable" is the best. In practice, it is simply impossible to have a standardized trading system suitable for all traders. The process of establishing a trading system is like learning to swim. Some people are good at breaststroke and some are good at butterfly, but before they try it in the water, it is impossible to determine which swimming style is most suitable for them. Therefore, the establishment of the trading system must be gradually formed through a large number of trading practices under the joint action of the trader's personality, interest, market acumen, risk tolerance, comprehensive judgment and other factors. Therefore, after establishing your own trading system, you need to check whether the established trading method is suitable for you? Do you have the ability to master this trading method? Does the system match the speculative goals? Does the system match the personality? In actual operation, it is necessary to repeatedly check and repair to establish a trading system that suits you.
2. The "feeling" in trading. Some traders have rich trading experience, and often have some "feelings" about market changes, and these "feelings" should be based on your trading system. The author believes that trading depends more on feeling.
3. Learn to wait and take short positions. When the market develops according to the judgment of the trader, there is nothing to do but watch patiently. Therefore, it must be understood: the act of trading is only a momentary thing. There are more than 200 trading days in a year, and the actual trading may only take a few hours. The rest is a long and lonely wait. In the transaction, it is necessary to make preparations before entering the market, seize the opportunity, and try not to act in a hurry. If you make a major mistake in the transaction, don't panic. The best way is to clear all positions and wait. Remember, the market will never lack opportunities.
4. Be good at admitting mistakes. No matter what kind of trading system or trading principle, mistakes may occur. In addition, traders always hope that all their transactions are correct, and once they make mistakes, they will find various reasons to justify themselves. The experience of a successful trader is not whether mistakes occur, but how you look at them. Therefore, how to deal with mistakes is another important sign of a trader's maturity. To be able to make real long-term and stable profits in the market, the answer lies in yourself: one of the secrets of successful trading is to find a trading system that suits you. This trading system is non-mechanical and is suitable for one's own personality. It has perfect trading ideas, detailed market analysis and overall operation plan.
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