Turtle Trading Rules is a book published by CITIC Publishing House in 2007. The author is American writer Chris Feith
The book mainly tells that the trading system used by the Turtles is a complete trading system, which is a major factor for the success of the Turtles. Their system makes it easier for them to trade consistently and successfully. Because it leaves no important decision-making task to the judgment of the trader. It has high practical value; a simple set of rules can make a person with little or no trading experience into a good trader.
I have read the book Turtle Trading Rules many times. The first time I read it was in 2014; the three core points of the book are: simple and consistent trading system; strong execution and fund management.
People who do transactions say that the road is as simple as possible. In fact, whether it is futures trading, foreign exchange trading or stock trading; the most fundamental core points are the above three points; if you solve the above three points, your transaction must be successful, no matter In any financial derivatives market, if any of the above three points is not well done, the transaction is doomed to failure.
There are many key points in actual trading involved in the turtle trading rules. I will write a series of articles to extract the key points in the book and recommend them to everyone.
In the world of trading, human emotions are the opportunity and the biggest challenge. If you control it, you will succeed, but if you ignore it, you will think.
---- "Turtle Trading Rules" page 15.
The correct trading behavior is contrary to the characteristics of human nature; all traders understand that controlling their emotions is the biggest challenge in trading; in the face of unknown account risks, continuous stop loss accounts have a large retracement in the transaction, When losses are serious, it is still necessary to maintain belief in transactions and trading systems. Every trader may be normal outside of trading, but price fluctuations and changes in account balances during trading are enough to turn a sane person into a crazy gambler.
In fear and nervous fear, people's judgment and behavior will be out of shape; traders will make wrong judgments on the probability of successful trading and the risk of trading. In 2015, I stopped losses more than 40 times in one afternoon, and my account lost more than 40%. My emotions have been completely carried away by the market and the price. Chasing ups and downs, as long as the market is going up, you will feel that the bulls are coming, as long as the market is going down, you will think that the shorts are coming, so enter the market frequently and stop losses frequently. From the perspective of me at the moment, my behavior at that time was of course ridiculous; but in the tension and anger, everything is so natural. The thought at the time was: I have been wrong so many times, this time must be right, right?
In 2015, I also set a rule for myself, stop trading if I make 5 mistakes a day or lose 5% a day. When it really happened that I made 5 mistakes in a day or lost 5% in a day, it was hard for me to stop; it was like a fat man trying to lose weight, and when he met something delicious, he told himself: I will eat one more bite and not gain weight. But that's it, one bite at a time, ruined how many fat people who are motivated to lose weight, and how many traders who are determined to be self-disciplined.
What is our biggest advantage in the market? It's not about advanced technology or magical methods; it's about not making mistakes or making fewer mistakes when others make mistakes. When others lose their minds, we remain calm and consistent in our transactions. When others make mistakes, we do not make mistakes or make fewer mistakes; it is our opportunity to make money in the market.
Loss aversion: A strong preference for avoiding losses, meaning that not losing money is far more important than making money.
Outcome Preference: Judging a decision as good or bad based on its outcome, regardless of the quality of the decision itself.
Recency Preference: Putting more weight on recent data or experience and ignoring earlier data or experiences.
-- "Turtle Trading Rules" page 17
Loss aversion is a common emotion among traders; some people are unwilling to stop losses and admit mistakes in trading, and this emotion is at work. There is a saying in the market that profit and loss come from the same source; how to make profit if you hate loss and don't want to lose? To put it bluntly, all profits in the futures and foreign exchange stock markets are obtained by risks. The most fundamental target of these market transactions is risk; if you don't want to lose money, how can you win?
Please think about a question, what is the purpose of our speculative trading in the futures and foreign exchange markets? Our purpose is by no means to not lose money? NO, our purpose is to make a profit, but what is the premise of making a profit? Take the risk and accept the loss. Exchange appropriate losses for higher profits.
Successful trading: profit - loss = positive value; but never: profit + profit + profit.
Result preference and recent preference: There is no big difference between these two points in essence; change the trading system settings according to the results of several transactions;
I believe that many traders will have this preference in real trading. Because this preference is more in line with the characteristics of human nature; I also have the same experience in the process of firm trading.
Tell me about my experience:
There are two options when choosing a stop loss point: the second lowest point and the lowest point. During the formation of the trading system in 2015, I have been entangled: it is better to place the stop loss at the second low point for a period of time, and it is better to place the stop loss at the lowest point for a period of time. So I switched back and forth between two different stop loss methods; the final result was that I couldn't make a profit no matter what. It is right for a period of time that the stop loss is at the sub-low point, and the trading system performs well; when I adjusted the stop loss of the transaction to the sub-low point, I started to execute and found that the subsequent market is more suitable for the stop loss to be placed at the lowest point.
And the market seems to always be against me, no matter how I adjust, I will suffer.
How to set it up?
This kind of result is the lack of understanding of trading and trading system concepts; the pursuit of perfection is a characteristic of human nature, and the pursuit of perfection in trading is a characteristic of all traders; most traders want to avoid mistakes as much as possible; but making mistakes is Inevitably, the trading system cannot be perfect. Not imagining trading too well, nor imagining a perfect trading system is the key point to avoid and solve result preference and taboo preference.
Summary: For futures and foreign exchange traders, emotions are both your friend and your enemy. Of course, every other trader has the same problem; solving this problem will make a difference in our trading. Because most traders are troubled by it and cannot get out of it.
We don't need to beat them, we just need to beat ourselves and control our trading emotions.
I will continue to write the actual trading experience of "Turtle Trading Rules" (2), and pay attention to my circle.
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