Plan your trade, trade your plan, this is a famous saying in the trading world. But many traders will ask a question: the market environment is ever-changing, how can they face the complicated market through their own rules and plans, because the market may deviate from your plan in the next second.
In fact, this is a misunderstanding. It is believed that the future of this market can be predicted, or it is expected that the market and price will reach a certain position, or that the market will start to change at a certain point in time.
From a more rigorous point of view, if the financial market can be predicted, then this probability should be 100%. As long as it is not 100%, it is all related to probability. Since it is related to probability, it cannot be called prediction. It is still a game called probability.
So trading is actually planning for the future. That is to say, if I get out of the A market, what should I do? What should I do if I get out of the B market? No matter how the market changes, I always have a plan to deal with it, which is called a plan.
Trading is actually a comprehensive game involving probability and money management. We can regard price fluctuations as a change in the size of the odds, or a change in the profit-loss ratio; take the entry timing in your trading system as the basis for betting.
For example, when you find an opportunity, and this opportunity is in line with your trading system, you enter the market and use a certain and controllable risk to fight for a relatively large profit. And when there is no opportunity, just wait with empty positions.
In fact, the transaction is like this. However, many traders in the market do not focus on this aspect, but focus on the ups and downs of the market. The market will rise tomorrow, and the market will fall tomorrow. They try to predict changes in market price fluctuations. Law, this idea is not realistic.
For example, one of the more important analysis tools in my trading system is kinetic energy. One of its functions is to judge the kinetic energy of the market. When the band of market movement is judged, I will make future transactions according to the direction it shows.
If this tool shows that it is long, and there is a weak order in the back, which is in line with my trading system, then I will enter the market. If the market has been adjusting and remains weak, then I will continue to pay attention to it. If the market continues to run, but it doesn't match my system's entry timing, then I don't do it.
If the market goes in the opposite direction (before it was long), and the momentum is also very strong, then my previous plan will be suspended. I can even make a new plan for the future. That's plan trading.
It does not mean that I can accurately predict where the future market will go and how the specific way will go through the identification of kinetic energy.
If you always predict, you will definitely guess right a few times, but this does not mean that there is good continuity, that is, it is impossible to guess correctly all the time.
Therefore, we should not focus on predicting accurate changes in future market conditions, but focus on things that we can control.
As I said just now, I have a clear response plan for future changes in market conditions. Outside the scheme? It doesn't matter, then do it again.
This kind of thinking is especially critical when holding positions. Everyone says that those who can sell are masters, and those who can buy are apprentices.
But what you need to know is that holding or closing a position is not perfect.
If there are no conditions that indicate that I want to get out, then I will always hold the position. No matter how the market changes, I know what to do. This is called a trading plan.
Of course, with the rules and plans, there will be a very embarrassing situation, that is, with the gradual deepening of trading experience, the subjective market sense may think that some market prices may go out of the trend, but at this point in time, there is no such situation. Entry opportunities within my system. So should we do it? I think it should not be done.
In fact, trading is a business. If the boss of a company wants to make any money, such a company may not be able to grow big or go far. Find out the advantages and barriers of competition of your company, find a direction for profit sources and ways to make money. The method is actually more important.
The same is true for traders. If you want to make money, you will lose your way in the trading field.
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Last updated: 09/12/2023 13:45
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