What is the essence of trading profit?

What is the essence of trading profit? As a professional trader, I often think about such a simple and soul-deep question. The author believes that the essence of trading profit is "earning the price difference of assets". "Acquired by this behavior. But it is a pity that almost no investment manager in the mainstream investment field, especially the group represented by institutions, will talk about "transactions". In their view, relying on transactions is a trivial skill, and it is difficult to make a lot of money, let alone form a scale There may be many people who do not agree with the above views, but the reality is that the investors who talk about "trading" are prevalent among individual retail investors. So, is the path to making money through trading has no future? The author believes that trading is also a way out.

In the process of financial investment, it is necessary to realize the importance of splitting and combining.

(1) The profit and loss of assets is caused by one's own ability or short board. It must be clear. Only when the problem is spun off can it be effectively analyzed and solved. It is the survival rule of different groups to maximize strengths and avoid weaknesses. The mainstream of current investment methods is still to obtain profits through value investment, such as stock valuation methods/valuation method systems, macro monetary policy systems in foreign exchange markets, etc. These fundamental analysis methods focus on "causes". It is difficult for ordinary retail investors to have the conditions to learn the entire and complete system of economics, and they also lack a platform for teamwork. This is the shortcoming of non-professional investors. We must be aware of it and choose to avoid it. Individual investors also have the obvious advantage of being "flexible" and can complete "transactions" through flexibility. Successful cases include the well-known foreign exchange market sniper Soros, the stock master Livermore, and the "quantitative trading" that has emerged in recent years, etc. These are all money made by trading. And this method of trading pays more attention to the "result", which is actually a different system of causal cycle than the "cause" that is emphasized by the fundamentals.

(2) There is a formula for successful trading: mentality + capital management + risk control + technology = success. However, this formula does not quantify it, and it only refers to "success" in general. In fact, the principle of the financial trading market is similar to that of casinos, and the key is the odds of winning between players and players or with casinos. If you and I toss a coin, neither of us has a chance of winning - each has a 50% chance of winning (it's a matter of probability). However, if you go to the casino to cast coins and the casino takes a 10% cut, you can only win back 0.9 yuan for every dollar you lose. This is the rule of the game. As the number of transactions increases, the cost will increase. If our system only has a 50% winning rate, losses are an inevitable result if we continue to trade for a long time. Then we extended to build a trading system, the trading system must meet one of the following two conditions: 1) Equal profit-loss ratio, high winning rate system 2) High profit-loss ratio, the winning rate can be relatively low. Only in this way can a trading system with positive returns be constructed. (There are many ways to build a trading system, which is another category and will not be detailed here.)

This is the split and combination of financial investment, including the split of the investment system and method, as small as the cognition or unknown of market transactions, and the loss or profit caused by which link or step.

Looking back, the essence of trading profit is to make a profit from the difference. How can it be done? There are many views that successful traders are "anti-human", and the author disagrees with this. Since it is "human", how can people be anti-human? Anything that can be reversed must not be human nature. If you can't get around this vicious circle, and turn against human nature and yourself every day, let alone not making money, it will be good if you don't become mentally ill. Therefore, correct thinking and cognition are the key to whether you can really make money!

The "Book of Changes" says that "the metaphysical is called Tao", the invisible and intangible "thought" is the topmost thing, "the metaphysical is called the tool", and the method that can be described clearly belongs to the lower level, so in In the process of trading, methods and methods cannot be learned, and if there is a problem with the way of thinking, it is doomed to end up as a loser. The "Tao Te Ching" says that "everything is born of being, and being is born of non-existence". In the same way, invisible thoughts determine visible behaviors. Let's talk about the core issues of how to make money through trading. If you have been trading for many years and still cannot describe the problem clearly, it means that you have not grasped the core and root of the problem.

Although trading is two simple actions, buying and selling, a complete supporting system is required to complete these two simple actions. A complete system, like the concept of a whole day, needs a day and a night. Similarly, a transaction also needs to be completed once a position is opened and closed. A truly successful trader pays more attention to the latter, when to close a position! Chinese people regard daytime as "Yang" and night as "Yin". However, in the actual trading process, people often focus on how to open a position, and pay less attention to how to close a position. The imbalance of yin and yang will inevitably lead to problems. In particular, closing positions after trading in the wrong direction is "error correction". This is the key to life and death in a trading career. Maybe old traders know the importance of "stop loss", but they don't really know how to do it!

In the process of trading, it is the biggest problem for traders to close the position too early when doing the right direction and failing to stop the loss in time when doing the wrong thing. Only by solving this problem well can the essence of trading become the essence of profit. Therefore, the core idea of ​​trading is to "get rid of self-attachment", which is also the only way mentioned repeatedly in the "Diamond Sutra". The right or wrong of the transaction is determined based on the trend after the transaction is completed. The subsequent trend has proved that the trend has not gone as expected. At this time, it is time to give up the original persistent view and direction and correct it in time. Only in this way can we save our lives and survive. At the same time, you can adjust your mentality to a certain extent and regroup. In the Tao Te Ching it is often said that "no self" probably has a similar meaning, and in the Heart Sutra it is said that "the heart has no hindrances" and it refers directly to the human heart. This is the "metaphysical" category. Next, let's talk about the specific "physical" method of trading.

People who really make money from trading must be people who follow the trend, not the so-called "sell high and buy low" people who look at petty profits every day. Why? The way of heaven will not make people want to "make big money" or "make small money", they can only choose one of the two. Whether you can understand this level is also very important. If you try to buy from the lowest point and sell to the highest point every day, you will definitely not make a lot of money. Even if you do a lot from the lowest point, you will get off early because you want to sell to the highest point. , will eventually miss a wave of big market perfectly! The correct approach is the principle that as long as the trend is there (trend lines and other auxiliary tools can be used), the list is there. Even if you get off the car early, you still have to dare to get on the car again when you find that the trend is still there. You must "suck the trend" like a leech. put. Successful traders use the combination of leech-like trend suction and error correction system to repeat and repeat transactions, and profit is the final result!

Trading is a relatively simple game of money when you're not really in it, but quite complicated once you're in it. If you want to survive for a long time and make continuous profits, you must fully understand the essence of trading, so as to truly master a set of correct investment concepts and investment methods that suit you, so that the financial market will naturally become your personal portable cash machine.

The vast majority of people do not have much future futures, because this devil's skill is too simple, so simple that most people turn a blind eye to it. Futures investment is a primitive low-level world, and human beings always look at the low-level world with a high-level perspective. Infinitely complicate things that are extremely simple. This is one of the main reasons why the vast majority of people fail in the end.

1. What is traded is not commodities, but human nature

What exactly is the deal? Why are most investors still unable to make stable profits? And when different people use the same trading system, the investment results are very different?

The investment failure of the vast majority of investors is not due to their lack of trading knowledge, but because they did not obey the trading discipline. A good method will eventually be implemented in the carrier of the method - people, who are the most important factor in determining the success or failure of a transaction.

Investment is actually a process of spiritual sublimation, a contest between oneself and oneself, a process in which human beings constantly surpass themselves and overcome the shortcomings of human character. In many cases, human nature often plays a decisive role in investment results, and its importance even exceeds the combined force of knowledge and experience.

Every investor who wants to devote himself to the financial industry must first overcome his own weakness in character and improve his character in order to make lasting and stable profits in the financial industry. The success of futures investment is the highest reward for perfect humanity.

2. The essence of trading is to test and capture the big market with continuous small losses

Don't always expect to make a profit every time, but closely follow the market trend according to an excellent trading system, and use continuous small losses to test and capture the big market. As long as you have the courage and repeat the above operations, you will be able to beat the market and accumulate wealth. This is the essence of trading.

Trading itself is a continuous process of trial and error, with smaller losses in exchange for larger profits. The small loss test trend is an operation management that strictly controls the loss ratio and closely follows the market trend to test and capture the big market.

3. Precise entry trading method

Choosing an entry point is critical in investment. Without a good start, how can you expect a good result. The quality of the entry point directly affects the size of the stop loss position. If the entry point is not good, it will cause the stop loss to be too large, resulting in a lower overall profit-loss ratio.

The pros and cons of entry points will also greatly affect investors' trading mentality. There are two links in the transaction: one is the self and the other is the market. It is very important to keep yourself on the rhythm of the market. Leaving aside the technical mentality, this is a simple thinking that has not been tested in actual combat.

The correct entry point can basically guarantee that you will make a profit when you enter the market. The price quickly leaves your opening cost zone in a relatively short period of time, so that you can look at the callback with peace of mind. Because the pullback will not touch your entry point, your mentality will naturally be good.

It can be seen how important the choice of entry point is in the entire investment market, and it directly determines the success or failure of trading and investment.

What is the most important factor in a successful transaction? It is a first-class investment strategy, a good trading mentality, accurate timing of entering the market, timely closing and exiting, and excellent capital management. All five are indispensable!

In the choice of entry point, the best strategy is to follow the trend to enter the market and enter the market after a well-organized breakthrough; the second is to follow the trend; the worst strategy is to chase the market against the trend.

4. The key to making a lot of money, long-term trading, take advantage of the trend to increase positions

A real investment expert only chooses low-risk versus high-yield opportunities in transactions. Moreover, they trade very rarely, often only a dozen times a year.

If you want to succeed in the international capital market, you must first preserve your own strength and ensure that you will not be eliminated by the market. On this basis, make profits for development. The last is the pursuit and profiteering. This requires us to do two things well in investment: one is to reduce the number of transactions, frequent transactions are the biggest cause of losses for beginners. The second is to adopt reasonable fund management to reduce losses and pursue maximum returns of funds. Long-term trading can effectively reduce the number of transactions, and increasing positions along with the trend can ensure small losses and large profits.

Short-term trading can only be a master, and long-term trading can become a master. The purpose of doing medium and long-term is to prevent unnecessary losses. Futures investment does not depend on which species to trade, but on whether you have the ability to make a profit.

5. The key to stable profitability is to establish a trading system that suits you

Investors who have worked hard in the investment market for several years will gradually understand: It is easy to make money once in the market, but the difficulty is to make money continuously and stably for a long time. It often takes several huge losses to wake up. If you want to make a profit in the investment market, you must learn and master the basic knowledge and skills of investment.

There are many trading theories, including Wave Theory, Dow Theory, Chaos Theory, Gann Theory, and K-line Theory. After in-depth and detailed study and analysis, I found that all these theories have a big flaw, that is, these theories have always been unable to solve the very critical problem of precise transaction positioning in transactions, and there is no accurate and objective judgment on the direction of prices. As a result, traders cannot accurately quantify the operation.

After a long period of contemplation, I finally understand that if you want to make long-term and stable profits in the investment market, you must standardize your own operating procedures and establish a trading system that suits you.

For the financial investment industry, without a suitable trading system, it is impossible to beat the market and achieve long-term, stable and sustainable profits. And this is the fundamental reason why most investors hover between heaven and hell.

No one can achieve the goal of stable profit before the trading method has not been upgraded to systematic trading. System trading is the highest state of trading, because it completely excludes human subjective views, and it is the key to completely transform investors from a spectator to an actor.

To put it bluntly, financial transactions are a kind of probability game. If there is no fixed trading system and only rely on feelings or news to open and close positions, the consistency of probability cannot be guaranteed, and it is difficult to achieve long-term stable profits. To stick to the procedure is to stick to most of the same situations and outcomes in the past. Stable profits are guaranteed by system procedures.

The topic is big, let's give a few examples first.

The profit logic of some leading hedge funds is that the economy has cycles, and there are price directions and fluctuations in the cycles. According to the algorithm, which node is in the cycle, active or passive algorithm strategies are adopted, and through multi-variety and multi-strategy layout, Wait for time to advance to gain profits. ​

There are also some quantitative hedge fund profits that are based on differences in price fluctuations in the time of every second and nanosecond every day, and use the differences to make quick profits. The profit margin is extremely small, the number of transactions is extremely high, and the winning rate is extremely high.

The general public can't figure it out, right? Let's talk about it in a down-to-earth way.

Some Wall Street asset management managers are masters of the game, masters of playing cards, good at testing opportunities, and make a small amount of stop loss mistakes. If they are in the right direction, they will stick to it and increase their positions at some key positions to obtain higher returns. To grasp the entry and exit through technical details, of course, it can only be done with a complete trading worldview and cognitive philosophy.

Let's talk about folk masters. Some people specialize in studying a few tricks, that is, they can read and understand the market, know how the market will go under what conditions, and grab a wave of big profits. They usually use small positions to test whether they will make money or not lose much. , Once the big opportunity is seized, the account will explode. Such traders are not in the minority. Because every time he makes a lot of money, he will make a lot of money, which is enough to make up for the loss. However, the disadvantage is that once an irresistible external force occurs in the market at the right time, the loss will be very serious, and the winning or losing will be on the position. Of course, if the position management has the logic of capital preservation, it will not hurt the principal.

There are also some masters. Study the secrets behind market price changes. For example, in the stock market, those who do volume price analysis and main force analysis are dedicated to catching stocks with daily limit. Follow the dealer to eat a wave.

Another angle. Some people in the financial market recognize zero-sum games. If you want to make a profit, your thinking must not follow the crowd and rely on popular thinking and technical analysis to look at the market, so that you can make money in the long run.

Back to mathematical logic. The essence of profit is that you earn more money than you lose. Within a certain period of time, everyone can learn the profitability of general transactions. How to control losses and reduce mistakes becomes the watershed between profits and losses. This link It's all about awareness and self-control.

Now I say these words on the basis of the continuous profitability of the account, I hope it will be useful to everyone. ​

The subject's question hits the nail on the head. It's rare to see such a question. Let's answer it seriously today.

In the trading market, people who have been trading for many years may still have some misunderstandings about the nature of trading. As far as the currency market is concerned, the essence of this market is a non-controlling trading market. Investors participate, and the order volume requires a single transaction to reach a certain amount before it will be included in exchange rate fluctuations. Like domestic mass traders, orders can be thrown to the market, but they will not be included in exchange rate fluctuations, that is to say Everyone's transaction will not affect the price trend, so what really affects the price trend? Of course, it is the world's major funds, investment banks, investment institutions, etc., and more than 85% of the transaction funds are speculative. I will not elaborate on these. You can find various information and statistics on the Internet. The method for various countries to participate in the regulation of market exchange rates can only be implemented through some policies of the central bank. This behavior may be long-term or short-term, and will not directly affect price fluctuations. It is an indirect After the fundamentals of the market change, the financial managers of major investment institutions will have investment behaviors based on the current price. When everyone agrees, that is to say, at a certain price point or interval, everyone agrees. If the direction of investment is the same, the price will always move in one direction. At this time, there is a large inflow of funds into the market. Remember, this behavior is a good inflow of funds. When the market has a good inflow of funds, you You can first confirm an object that can be studied. If everyone has a different view on the current situation, the investment direction of the financial managers will not be different. At this time, it is a game process of long-short power. In a certain price range, the power of both parties tends to be balanced, and the price performance is oscillating behavior. . In addition to the above two, long-short forces will also show another way, which is the relationship between strength and weakness. This is a bit deep, and I will slowly illustrate it with examples later.

First briefly explain the process of market operation: first there are changes in the fundamentals--then there is a change in the heart of the fund managers, and there is a desire to invest-they put money into this market--resulting in price fluctuations Change ----- generated K line

The K-line is the product of funds entering the market, and it is the manifestation of a result. So what aspects can our research objects start with? The first is the fundamentals. This is relatively difficult. Some people often look at the data to make orders. Over the years, the data is good or bad, and there are often situations that go against the grain. Why? The reason is that for the same thing, no matter what the announced results are, everyone’s opinions may not necessarily be the same. The results of data announcements may not necessarily reflect everyone’s views on the direction of the market. To put it simply: your understanding of data and fund managers Your understanding may not be the same, so you can't study this. So your research object can only be the price, and the K-line is the product of the price. It is the most direct way to express the flow of funds into and out of the market. The points where the long and short forces are balanced, these are the objects that need to be studied. With the correct research object, you must have the correct research logic. Trading itself is not probability. Strictly speaking, it is a set of logical reasoning process. Step by step, every result you infer is reasonable and reasonable. According to the data, and these "reasons" and "accords" must be in line with the principles of the market. To put it more simply, you can just study the money. Where does a lot of money come in? After the money comes in, does it continue to increase? , If not, did he go in and run away by himself, came in but did not run away, did he meet a strong opponent with funds, or stayed by himself, etc. When you understand these and can reason them out step by step, you can make a profit. Don’t complicate simple things. Complicating them will only make you more and more devious.

Seeing this, if you still understand a little bit of what I said, I hope you can think about it seriously. If you think what I said is unreasonable, don’t bother, don’t come here, and give a word to the gangster; those who make big things , do not seek publicity

To make a digression, the financial market is the top market in the world, and it is a place where money is used to make money. Now the global financial peak is still in Europe and the United States, and the United States is the representative. If this is the case, we must first see clearly the United States The constitution of this country, why the country serves, and who all its policy interests serve, must not be ordinary people. It is inconvenient to talk about it in more depth.

Many people are too obsessed with "essential" things, and always want to fully understand what they are doing? Why do you do this? What should I do? In fact, there is nothing wrong with this, so for convenience, the following is a series of replies to the three common essential problems in finance.

1. The nature of the market:
　　1. Anything may happen in the market, so the essential attribute of the market is probability, not inevitability. Nothing is static. Unfavorable factors in the past may now become favorable factors, and vice versa Of course.
　　2. The market is always right, don't argue with the market.
　　3. The essence of the market is killing, and the occurrence of all market conditions is also illusory and empty, and the fake show can be done for real.

2. The nature of the transaction:
　　1. The analysis matches the subjectivity of the transaction and the objectiveness of the market operation.
　　2. Why do you make money? Because it follows the trend of the market; why lose money? Because it failed to follow the market trend.
　　3. It has nothing to do with whether the analysis is right or wrong, and it has nothing to do with inside information. It all depends on whether your subjectivity is in line with the objective of the market, and how to make adjustments when it does not match.
　　4. Everything changes with time and situation, seek to deal with it regardless of the reason, and only respond to the present moment.
　　5. Always trade (bet) on the high probability side. Trading strategies and fund management are more important than analysis methods.
　　6. Theoretically speaking, any position can be traded, but the risks and possible benefits are different.

Maybe these opinions are just my humble opinion and may not conform to the thinking of the public. If you have better ideas and cognitions, you can leave a message for interaction.

The essence of trading profits, I think, is to buy low and sell high.

Since it is profitable, it requires the most comfortable trading profit model, such as frequent trading, short-term trading and so on. Although such an operation method can be profitable, it is less stable and has stricter time requirements for transactions.

The reason, I think, is to buy low and sell high. The main thing is to consider the moderation of the transaction. When entering the market, we are not here to play, but to trade with a purpose. Selling low and selling high is undoubtedly a very good trading result, and it is also the core essence of profitability in my opinion.

There may be various problems in the actual transaction process, but I think that there are no problems in the transaction, find the problem and solve the problem.

Profit is inseparable from the following 3 points:

1. Consistency: If you are a purely technical school, consistency is the core of achieving stable profits, and it is also the only way to truly enter the door of trading. Stable input leads to stable output, and all aspects of the trading system are unstable. To make a profit, consistency is the only way to allow you to take advantage of the probability at any time. As for consistency, it is a law of speculation that only a few people can master.

2. Single risk control: Control the ups and downs of your capital curve through single risk control. This is a life-saving talisman that can keep me alive after losing 10 or 20 times in a row.

3. The logic and belief of trading: The trading system only solves the problem of tactics. If you really want to make long-term and stable profits, you must improve your awareness of trading, otherwise you will often face many psychological obstacles, such as being unable to hold profit orders and often Selling off, losing money in a row, not daring to do it, not doing 10 transactions is like changing the technical method, there is always a desire to start in advance if there is no signal... and these psychological problems are essentially logic and cognitive problems, are you 100 % trust your trading system, this is a problem.

Among them, the most important thing is the logic of the transaction, which is the basis for whether your transaction can be profitable.

Before answering this question, first ask a question, what is the meaning of life? Money, identity, status, honor, ideal, life, house, car, family, etc.

Return to one point, realize self-worth, and this life is not in vain. Confucianism, "you do".

What is the nature of the transaction? Price game, follow the trend, self-knowledge. Dissecting the core, overcoming humanity, and more. Return to one point and know how to advance and retreat. Taoist thought, "inaction".

1. "Inaction" is the core idea of ​​Lao Tzu's creation of Taoism

The first sentence in the "Tao Te Ching" reads, "Tao can be said to be Tao, but it is very Tao; name can be named, but it is very famous". "Tao" is not the "Tao" defined by the humanistic society, and "name" is not the name given to all different kinds of things by the humanistic society.

1.1 What is "Tao"?

The first sentence of the fifth chapter of "Tao Te Ching" "The world is not benevolent, and treats all things as dogs; the sage is not benevolent, and treats the people as dogs." The world is indifferent and unkind, and treats everything in the world like confetti that comes and goes when you use it; the sages are not kind, and treat the people like confetti that comes and goes when you use it.

The third sentence of the twenty-fifth chapter of "Tao Te Ching" "Man follows the earth, the earth follows the sky, the sky follows the Tao, and the Tao follows nature". Human society regards the movement of the earth as its own law of operation, the earth's movement of the heavens as its own law of operation, and heaven uses Tao as its own law of operation. Tao is formed naturally, and it is natural law.

Tao - the law of nature. Therefore, the heaven and the earth use the laws of nature to make everything in the world run according to its own laws. The birth, old age, sickness, death, joy, anger, sorrow, joy, and joy of any creature or species on the earth must run according to the laws. There is no distinction between good, bad, and weak, including human beings. Names are just code names, and humans are just a species of nature. The cycle of birth, old age, sickness and death is the natural law of species reproduction and evolution. Honor, status, wealth, honor, or lowliness, poverty, sorrow, etc. will change with the law, only the law of nature will never change.

1.2 How to "do nothing"

The third chapter of "Tao Te Ching" "Not honoring the virtuous, so that the people will not fight; not valuing hard-to-find goods, so that the people will not be stolen; not seeing what is desirable, so that the people will not be chaotic. It is the rule of a sage, emptying his heart and filling his belly Weaken their ambitions and strengthen their bones. They often make the people ignorant and have no desires. They make the wise men dare not do anything. If they do nothing, everything will be cured.” If you don’t praise the virtuous, then the people will not strive to be virtuous. Show personal value; if you don't sell rare things, the poor will not think about it and steal; if you don't see things that arouse desire, the people will not be confused. The sage's strategy for governing the country is to make the people low-minded, full-fledged, lacking ambition, and physically strong. People often remain ignorant and desireless, and those who are ambitious and wise cannot accomplish anything. By promoting the way of doing nothing, the country does not need the monarch to worry too much about the country's development, and the country and the people will naturally form a harmonious situation.

2. The essence of the transaction is the same as "Tao Te Ching"

With Lao Tzu's "Tao Te Ching", look back at the "essence of trading", study the market's progress trajectory to find out its operating law, and use this law to return to the market, thereby increasing the probability of profit.

• l High-frequency strategy, the main way to make profits: rebate + handling fee + profit + capital allocation (bonds, fixed income, etc.)

• l Intraday strategy, spread, etc.

• l Medium and long-term strategies, inflation, political effects, economic cycles, inventory fees, etc.

Therefore, the profit-seeking method of any strategy is formulated according to the operating rules of its corresponding varieties. Furthermore, people do not need to intervene in the operating laws of the market, but should follow the operating laws of the market, thereby implementing the laws and seeking more benefits for themselves. In other words, the law comes first, and human execution comes later. Human cognition and emotions can only help to make this operating law stronger, but nothing can be done to change the law. Let the law give the answer completely.

Do you need to be emotional?

Do you need ideas?

Do you need to have a reference?

nothing. Just like the programming code, formulate a strategy according to the rules, open an order if the conditions are met, close the position if the conditions are met, and execute it.

　　Sir, your question is very good! In fact, this is also a question that many investors (including me) have been thinking about. I just read a good article recently, and I think it is a good interpretation of this question, so I slightly revise it as an answer, which can be regarded as offering flowers to Buddha.

　　There is a saying that is good, if you are serious, you will lose. In the foreign exchange market, everyone should have the same feeling. Sometimes you can make some money by doing as much as you want, but when you put your mind into it, you find that making money in currency trading turns out to be So difficult. It is not easy to make stable and continuous profits in the foreign exchange market, but many people define a few occasional profits by luck as the regular state of the transaction, which is very dangerous.

　　If you want to survive in the market for a long time and realize your ideals and aspirations in the market, you must first understand what is the nature of market trading profits?

　　I believe that many people will have the most direct answer to this question. Of course, the essence of trading profits is to buy low and sell high or sell high and buy low! Objectively speaking, this answer is not wrong, but it is biased towards the result and does not touch the root cause. In fact, this kind of trading in the foreign exchange market is human nature, and the essence of profit is to constantly try and make mistakes, and then capture the big market that is not easy to be found but has huge profits!

　　Many traders fail in the foreign exchange market, not because they lack trading knowledge, but because their mentality cannot control this knowledge, and there is no way to achieve the unity of knowledge and action. This is the weakness of human nature. As many financial leaders have said, trading is actually a process of self-cultivation, a contest with oneself. Only by constantly overcoming the fear and greed in one's heart and constantly suppressing subjectivity with objectiveness can one gain a foothold in the market. In most cases, the importance of human nature even surpasses technology and experience, and plays a decisive role in the outcome of the transaction.

　　Many people think that there must be a way to ensure the correctness of trading, and they have tirelessly researched, tried, and optimized for this; and then went around in various technical methods, but the results were not satisfactory. In fact, the weapon of success in trading is not as difficult as people imagine, and it is even so simple that people will ignore it. Everyone always expects every transaction to be profitable, but unintentionally resists several small losses in exchange for a big profit, or they don't believe that the power of large profits can cover multiple previous losses. This is why many traders fail.

Trading itself is a process of trial and error. As long as you have the courage to accept continuous and limited losses, you will definitely be able to exchange for your own wave of profits. It's just that when designing losses and profits, we should pay attention to the winning rate and the profit-loss ratio. The establishment of the trading system should follow the principle of consistency, the time period is fixed, the loss ratio is fixed, and the indicator reference should be as simple and clear as possible to ensure that the trading signal is unique.

　As long as the combination of win rate and profit-loss ratio is a positive expected value, then the rest is execution. So how to judge whether the expected value is positive or negative? Backtesting through a period of historical market, it is concluded that if the average winning rate is 40% (that is, if the average 5 transactions are successful 2 times), if the average profit-loss ratio is 3:1 (that is, 1 profit can cover 3 losses) ), then after calculation, it can be found that, on average, every time you make a profit, you need to lose 2.5 times, and the profit of 1 time can cover the loss of 3 times, so you can earn 0.5 times of profit in each profit and loss cycle . This is a trading system with positive expected value.

　　Gaining an edge in trading consists primarily of two things: the human and the system. The winning rate and profit-loss ratio in the system determine whether the transaction can be profitable for a long time. It is the entry and exit strategy that determines the winning rate and the profit-loss ratio. Making the entry point as accurate as possible can greatly increase the winning rate of the transaction, thereby reducing the cost of trial and error.

　　What can be called an accurate entry point? Even if you quickly get out of the cost as soon as you enter the market, you will not be able to touch the entry point of stop loss even if the market pulls back in a short period of time. The following summarizes several specific operating methods (including the principle of increasing positions) for your reference:

　　Entering the market at inflection points, when the trend changes, use the changes in transaction positions, K-line shape changes, moving average changes, etc. as references to capture such opportunities. This is the best time to establish a bottom position for long-term trading.

　　Consolidation and entry, in a trending market, the price operation cannot be smooth sailing, there may be a short-term rest and consolidation stage in the middle, and the previous trending market will continue after sufficient momentum. And the stage of gaining momentum and consolidation is our second opportunity to enter the market. Entering the market when breaking through the consolidation platform is a critical moment to increase positions.

　　Pull back (or rebound) to enter the market. After the market breaks through the key support or resistance level, a form of stepping back is formed. When the stepping back ends and develops in the direction of the original trend again, you can consider entering the market, and set the stop loss at the key support or resistance levels.

After having the above several entry strategies, match them with corresponding stop loss and take profit, and implement appropriate fund management according to the winning rate, basically a prototype of a trading system can be formed. In addition, successful trading must also have a corresponding trading discipline. Because after the formation of the system, subjectivity is no longer important, and discipline and execution are effective means to ensure objective transactions. The main body of the transaction is people, and the system is just a tool for people. Whether the final victory can be achieved does not depend on whether the tool is easy to use, but whether the trader can control the trading system well, abandon themselves, and achieve objective transactions.

      Only by understanding the above, and only by doing the above, can you understand what the essence of trading profit is, and you can make long-term stable profits in this market!

For friends who do transactions, they often think or talk about a question, that is, what is the core essence of transactions?

Some people say that it is to take advantage of the trend and light positions; some people say that it is to follow the intrinsic value; some people say that it is to break through the range and enter the market...

What they said is correct, but these are only at the level of methodology, not the essence.

The core essence of trading is the game spread.

Why do you say that?

Let's first look at what is a transaction? It is a sale, one buys, one sells, and when they are matched, it is a transaction.

What is the purpose of our transaction? Just to make money.

The process of a profitable transaction is to buy low and sell high, or sell high and buy low; the price difference is the profit.

Whether you are in the stock market, futures market, or gold foreign exchange margin market, if you want to make a profit in a transaction, you must play the price difference and realize the profit!

Even if many fans of value investing in the stock market want to make a profit, they still have to play with the price difference-buy low and sell high.

Not to mention the highly leveraged transactions in the futures market and the gold foreign exchange market, which are also buying low and selling high; or selling high and buying low.

Even for enterprises, factories, stores, and vendors, their profits are formed by the aggregation of price differences in each transaction, large or small.

Therefore, the core essence of trading is always the game spread.

Then the question comes, how can the transaction better realize the price difference? Or what is the key to making money in trading?

When we talk about buying low and selling high (or selling high and buying low), we actually have to solve two problems—buying well (low) and selling well (high).

If you don't know when to buy and when to sell, you will never be profitable.

In other words, if you earn today and lose tomorrow, you always earn less and lose more, but you will never be able to make stable profits, or even survive in the market.

For example, if you buy well but sell poorly, you will not make any money, or your profits will often shrink sharply.

Or if you buy poorly and sell well, sometimes you can make some money, but the difficulty is greatly increased.

Whenever the bull market is at the top, that is, when the market is the craziest, it is often when a large number of retail investors enter the market, and they are eventually trapped on the hillside or can only cut their flesh out of the market. The most fundamental reason is that if you don’t buy well, it’s hard to sell well.

Therefore, it is necessary to buy well and sell well. In other words, the entry and exit must be just right.

Everyone understands the truth, so how to do it?

I have summarized the following 4 points to share with you, hoping to inspire you:

1. Build a system: build a trading system with positive expectations.

2. Formulate principles.

3. Observe discipline.

4. Constantly cultivate the mind and optimize the system.

Let's look at the specific steps:

1. Build a system: build a trading system with positive expectations

We all know traders who don't have a system, they trade by feeling when they trade. You ask them why they are long or short at this price, and the answer is always one reason today, and another reason tomorrow, with no consistency; what's worse, some people still have a blank look-they just feel that it is going to rise or go up. fell...

The funds of traders without a system are like a mob. No matter how strong their funds are, they will be short-lived. It is only a matter of time.

Systematic traders, on the other hand, have some rules when trading. Although they may not be able to make long-term stable profits, at least they have a consistent basis for entering and exiting the market.

So what is a trading system with positive expected value?

The so-called positive expected value trading system is a trading system that obtains a positive result after trading according to the system rules for a relatively long period of time.

In other words, it is a trading system that has been proven to be stable and profitable .

So how can we build such a trading system with positive expectations? Two ways:

1) Learn from someone close to you or someone you know--surely someone who has achieved success in this area and is willing to teach you.

That is, this person is willing to teach you his trading system with positive expected value without reservation. This requires background, luck, fate, etc., which cannot be met.

But this is a "shortcut".

2) Build it yourself. Since there is no such "master", then everything can only depend on oneself.

But this is destined to be a road full of hardships and bumps. And the process may take a lot longer than you think.

There are many ways to make a profit in trading, but countless people who use the same method to trade and lose money.

Whether it is fundamental analysis or technical analysis, a system that can make long-term stable profits must include but not limited to the following three elements:

* A set of methods . This set of methods is a tool for evaluating when to enter, exit and increase or decrease positions.

* risk control. Various unexpected situations will inevitably occur during trading, and countermeasures must be taken to minimize risks in time.

* Money management . It must be very clear what is the proportion of funds in a single trading position and what is the proportion of funds in a total position. These must be designed and allocated before the transaction. Good money management can help you survive in this market longer.

When you have built these elements, the next step is to continuously test, verify, and then polish it into a profitable system through continuous trial and error.

As for how to polish it, it depends on the method you choose and your personality. No one can do it for you, you can only rely on yourself.

This process must have been accompanied by great pain and frustration...

Until one day, you finally built this trading system. If you compare the trading system to a car, then congratulations, you have built yourself a sports car with superior performance, and you can drive it in dangerous situations. financial markets.

2. Formulate principles

You may be thinking, can't I start the money printing machine now and collect money lying down? Then you are thinking too much.

Even if you have the "Dragon Slaying Knife", you may not be able to become a martial arts master.

Although you have built yourself a sports car that is much better than others, but think about it, in your daily life, can you drive this sports car on a rampage and run amok? By the way, no. You have to abide by the traffic rules, otherwise it will be difficult to guarantee that you will not be killed in a car crash!

So in trading, even if you have a good system, you must also formulate trading principles. Trading with a system and no principles is not much better than having no system.

Kant said: "Man makes laws for nature".

You also have to legislate for the market .

Just like the important role of the constitution in ensuring the stability and long-term stability of the country and society, your trading principles are the "constitution" of your trading system.

This "constitution" is generated in conjunction with your trading system, it is the foundation of your trading system, and it is the fortress for your survival in this so-called "the most difficult industry in the world".

In fact, you have already generated certain principles while building the system, but these principles are not specific enough and comprehensive enough.

Now it is a comprehensive formulation of principles at the strategic level. For each position you trade, under what circumstances you can enter the market, under what circumstances you must exit the market, under what circumstances you cannot enter the market, under what circumstances you need to reduce your position, etc.; clearly formulate the principles in all aspects, the more specific and more accurate you are. The clearer the better.

When we review the market, we always feel that the market is so clear at a glance; but at the moment, the market is always changing, and we always feel specious and ambiguous, don’t we?

Through trading principles, a lot of market noise can be eliminated and the trading winning rate can be improved.

Emotions also often influence our behavior. Think back, how much loss, loneliness and pain have you endured wandering alone between heaven and hell? How many sleepless nights have you passed? In the depression and anger again and again, the transaction is made worse...

Trading principles can also eliminate emotional interference and make transactions more rational.

When you have formulated a comprehensive trading principle, you will find that the frequency of your trading has become lower, which is a good thing-the door to wealth has been opened to you!

3. Observe discipline

Now you understand very well that as long as you make good use of the trading system and enter and exit the market according to the principles, you can make stable profits. From now on, you can sit back and relax!

Then you underestimate the weakness of human nature - greed and fear!

We stare at the board every day. The red, green and green K-lines represent wealth, and there are devils and angels hidden in each line. They constantly lure us: "Come in, this wealth is yours. !", constantly tempting us to break the trading principles to enter and exit the market...

You may ask, will the principles you set up not be followed?

Think about it, how many New Year's resolutions, reading plans, and fitness plans have you made? How much did you do again?

So we need to be disciplined. There is a system and principles, but if you don't follow the discipline, your funds will only be relatively short later. Because every mistake you make could be fatal and set you on a path of no return!

In trading, to put it simply, discipline is execution. Once the principles are formulated, they must be strictly enforced. This requires us to be highly self-disciplined.

Execution, or how to cultivate self-discipline? You can use the little things in life to cultivate, such as what time to go to bed every day, when not to use your mobile phone, or to implement a fitness plan, etc.

"If you don't sweep a house, why sweep the world?"

When you develop iron-like executive power, you can clearly see the wealth behind the door beckoning to you!

4. Constantly cultivate the mind and optimize the system

1) Constantly cultivate the heart

Don't expect to be able to roam the rivers and lakes after learning a nirvana. People who can really walk the rivers and lakes and stand tall for a long time may not have many nirvana skills, but they must be people who have been practicing internal strength for a long time and then have deep internal strength!

The inherent human weakness of human beings cannot be overcome by us in one or two years. How many talented traders finally came to a tragic end because they could not overcome their own demons...

The examples of Livermore and Nick Leeson sound the alarm to us from time to time—traders who don’t pay attention to cultivating their hearts will repeat the same mistakes from time to time. Even if they have excellent equipment, they only live a little longer .

Constantly cultivating the heart is the homework that every trader must do in his life.

2) Continuously optimize the system

The market is like a living body that will continue to evolve.

Institutions, consortiums, traders, retail investors, etc. participating in the market are playing a game of survival of the fittest, and those who can finally stay in this market are elites who are constantly learning and evolving.

Therefore, we must continue to learn and optimize our trading system to adapt to the continuous evolution of the market.

(It should be noted that optimizing the system is not transforming the system. Optimizing is taking a little bit of measures to make it better; transforming is hurting muscles and bones, and often the gains outweigh the losses.)

"Heaven is healthy, and a gentleman strives for self-improvement."

A trader who can make stable profits in the financial market must be a person who has done a good job in the above four aspects, and is still learning and evolving.

— final words —

You may be a little worried, why is it so difficult to make money from trading? Yes, it is so difficult to make long-term stable profits in this market, and this is the only way to go. Or, you don't enter this market.

Making a living trading has never been easy.

We are fighting in the market with a kitchen knife and troops with submachine guns. In addition to learning to hide and protect ourselves, we also need to learn to wait, be willing, etc...

When the market does not give you a chance, you must endure loneliness and suffering; when the market gives you an opportunity, don't doubt or feel anxious, but act decisively and go forward; when the market does not give you a profit, you must react quickly and immediately Admit the compensation; when the market gives you a profit, accept it as soon as it is good, and don't try to let the tail of the fish go.

Trading is like life condensed. When you realize the true meaning of trading, you also understand the true meaning of life.

Trading makes life more profound and exciting! Let your mind be more free!

Simply put, trading profit is whose money you earn. If you understand whose money you are earning, then you will naturally understand the logic behind the profit.

Creating wealth by trading fluctuations, buying low and selling high is the most direct form of profit. Here we do not use stock and currency transactions as examples of frequently traded products, but let’s briefly talk about houses. Because since the financial crisis, the most successful way to invest in China is real estate.

From the end of 2007 to the end of 2018, according to the National Bureau of Statistics, the national average sales price of commercial housing increased by 150%, with an average annual increase of 9%. According to data from a third-party organization Centaline Real Estate, housing prices in the four major first-tier cities have increased by 260% in the past 10 years, with an average annual increase of 12%. All house price indexes have far exceeded the average returns of deposits, wealth management and bond products.

So here comes the question. In the past, everyone bought a house and made money. Whose money are they making?

If the house price is decomposed into two parts, one is the rent, and the other is the ratio of the house price to the rent. Then the part of the rent actually represents the money of economic production, and the change of the ratio of house price to rent represents the money of the transaction. The ratio of housing prices to rents has continued to rise in the past 10 years, so everyone has made a lot of money at the transaction level.

Taking the four major first-tier cities as an example, although the rent price has also increased by 80% from 2007 to 2018, the annualized increase is only 5.5%, which is far lower than the 12% increase in housing prices during the same period. It comes from the increase in the ratio of housing prices to rent, which is actually the money earned from the transaction.

Since the money from the transaction is made, then some people should make money and some people lose money. But in the past 10 years, everyone has basically made money buying houses, so who is losing money?

In fact, the answer is very simple, it must have made money from the counterparty. It's just that this counterparty may be a past opponent or a future opponent, it may be someone else, or it may be yourself.

The first is to earn money from past counterparties. For example, buying a house from a developer in 2005 and 2006 is equivalent to letting the developer transfer the future rise in housing prices to you, so smart developers like Li Ka-shing know how to hold back the property and not sell it.

The second is to earn money from future counterparties. For example, from 1990 to 2013, Japan’s national housing prices fell by as much as 80%. If someone sold their house at the high point of Japan’s 90-year boom, everyone who bought the house later would bear the loss. If you didn't sell your house at the high point in the 1990s, you would be a successor yourself.

Therefore, China's real estate bull market in the past 10 years is that everyone has made money for economic development and money for transactions. But now that China's economy is slowing down, the number of working-age population has begun to decline, and the ratio of housing prices to rents is at a historically high level, this means that it will not be easy to make money from housing in the future.

From the perspective of making money from a house, trading profit is to earn other people's money, which is completely consistent with our daily understanding of trading.

Many people may have their own views and understandings on this issue. My personal view on the essence of trading profits is: "people".

I can't say that other people's understanding is wrong. Everyone has their own views. Let me explain my own views.

First of all, the ultimate executors of all transactions are people.

In the trading market, whether it is making money or losing money, whether it is physical or financial, all operations are ultimately done by people. It is said that the fluctuation of the K-line is ultimately the result of the promotion of funds, but you must know that funds will not actively enter the market by themselves. It is just a lifeless object or a number. Only after the traders put their chips in the market, and after the long and short sides form a killing, will there be fluctuations in the K-line in the end.

Second, the basic composition of the market is an artificial factor.

What is the currency trading market? Currency exchange market is the abbreviation of international exchange. The concept of foreign exchange market can be divided into static and dynamic. Dynamic currency transaction refers to the financial activity of exchanging one country's currency into another country's currency to pay off international debts.

Its most important keyword is financial activities. Since it is an activity, it must be operated by people. Therefore, from this level, people are the main body that ultimately constitutes financial activities. Therefore, the activities of the financial market are, in fact, essentially It is people who are moving.

In addition, some people may say that trading restrictions can be completely replaced by EA, which weakens people's sense of existence. But if you think about it, all EAs are ultimately the condensation of the mathematical model of the trader, which is also the final mechanical set of human thinking. At the same time, all EAs still need to be controlled by humans. At the same time, I don’t know if there are completely laissez-faire EAs, but what I know is that all EAs on the market are also semi-automatic. The human element is still essential.

As for other factors, I hope that interested people can add.

In general, I still believe that talent is the most essential and fundamental thing for trading profits.

This is a question about trading cognition. Although there is no unified answer standard, it is also a question that every trading investor must sort out and often think about. It cannot be avoided, otherwise it is absolutely impossible to become a winner in the transaction. Various problems arise, such as: unstable transactions, large losses and small profits in transactions, inability to hold positions in transactions, and for example, stable transactions but unsatisfactory performance, etc. Maybe we misunderstand it because of the problem of method, maybe we have a partial understanding of the problem of profit and loss ratio, or we may simply attribute all problems to mentality.

What is the nature of that problem? I think it is still in the cognition of trading, the cognition of the non-randomness behind the seemingly random investment market, that is, knowing the laws, understanding the laws, following the laws, and using the laws! "Follow the trend, benefit your actions, maximize your speed, and consolidate your foundation." Therefore, there are many factors that affect trading profits, but most of them are appearances rather than essences.

On the basis of understanding the nature of the transaction, build the system or system architecture.

Based on my own ignorant understanding, the essential method of trading profits solves three major problems:

1. Solve the stability problem of the transaction, that is, a reasonable winning rate.

It must be reasonable, not the higher the better, otherwise it will leave the essence of trading profit and make trading more stressful and painful. In addition to improving the trading system, the solution to the winning rate must be based on a certain quantitative trading statistics, not short-term trading statistics, but also to maintain the consistency of the rules of playing cards in the implementation. Not only should we pay attention to the winning rate, but also pay attention to and accept the loss rate.

2. Solve the security problem of the transaction, that is, the odds problem.

The winning rate is not the core and key to profitability. We often see many traders with stable trading methods, but they still cannot make money. Therefore, solving the winning rate only solves the stability of the transaction, and there is still a distance from the profit of the transaction, so the second is to solve the security of the transaction, that is, the odds. Odds are not a simple understanding of the profit and loss ratio, the important thing is to pay. Therefore, the core problem to be solved is how to rationalize the transaction. On the basis of clear compensation, we should consider in the transaction: how to determine the compensation first and then the profit, what position to enter and exit, when to enter and exit, what method to enter and exit, how to correct errors, and how to deal with loss orders. Management, how to manage profit orders, so that the problem of small losses and large profits can be reflected in the transaction.

3. Solving developmental problems is the core of the core of the transaction, that is, the problem of transaction efficiency.

Solving the winning rate and odds does not mean solving the maximization of trading profits. Common problems, performance cannot be improved, and profits can be made but not much. Some people say that it's very simple. If you increase the first position, you will increase the possibility of making a big profit, but the risk will also increase. If things go on like this, the profit will not increase, and there will even be losses and leveraged liquidation. Remember , performance is not obtained by the first position. Therefore, there must be a method and system including "risk and efficiency management". To be familiar with position management, you must know how to increase and decrease positions. The core is: increasing positions with loss orders does not increase risks, and increasing positions with profit orders ensures zero risk. There are momentum increase positions and trend increase positions. In addition, there must be a compound interest rolling pattern.

The core elements of trading profitability are: the embodiment of trading concepts and the formulation and application of strategies.

It is reflected in the transaction: the correct trading rules, as long as the trading rules are followed, the loss is also "right", otherwise the profit is also a "wrong"! The second is reasonable trading behavior. The correct trading rules are to maximize the understanding of trading rules and formulate Corresponding trading entry and exit rules; for reasonable trading behavior, first, express the rules correctly; second, only participate in highly rational transactions based on comprehensive analysis and evaluation; third, grasp and have the ability to limit losses and expand profits methods and capabilities.

The above is just my humble opinion.

The essence of trading profits, I think, is still a trading system. A set of trading models that fit your own trading style and can describe the market.

Systematic trading is the trading method that almost all traders dream of. In the face of trading signals, you know how to choose; in the face of losses, you know how to deal with them; in the face of risks, you know how to avoid them. It is undeniable that a good trading system is the guarantee of our profits.

The reason why I personally think that the essence of trading profit is suitable for my own trading system is mainly from the following aspects:

First of all, what we need to know is that our ultimate goal as traders is to make money.

It lies in how to make long-term and stable profits. A single transaction or only a short-term profit cannot summarize the essence of the transaction. There is no shortage of legends in the trading market, but what is lacking are trading legends that can make stable profits in the end but can also retreat unscathed. The market has always been at risk, and every transaction we make takes the initiative to put ourselves at risk, which is unavoidable. Trading by luck will never be able to effectively control risks. Therefore, we need rules, rules that can describe the market correctly and reasonably, and use rules to regulate our own transactions. This is what we often call a trading system.

Secondly, the trading system can tell us when to do something.

It is undeniable that money never sleeps, the wealth in the trading market is endless, and it is impossible for us to capture all the profits in the market. Knowing the trade-offs is still an important trading rule in the market. What should we do when the market has appeared; what should we do when the market has given a corresponding trading signal. After the transaction, how to deal with the next transaction and so on. These should not be done casually, but require as rigorous a trading plan as possible.

Third, the trading system allows us to avoid psychological errors.

The market is a disorderly and nonlinear trading market, and no one is perfect. In trading, you will more or less encounter a series of psychological factors such as bad mood, external interference, excessive pressure, etc., and the inherent defects of human nature are exactly the traps of the market. This is also a problem that traders cannot completely avoid. There are many transactions that lead to losses due to mental factors. This is also one of the reasons why everyone agrees that it is difficult to succeed in trading, which is easier said than done. The mentality of trading still needs to be overcome by oneself after all. Of course, it does not mean that after having a trading system, we will be able to overcome the problem of trading mentality, at least it can help us reduce the occurrence of mistakes.

Finally, what we need is that the process of trading profit is similar.

Trading is a very rigorous project, it is more like a complicated machine, as long as there is a problem in one of the links, the result may be a painful price. It can't be perfect, but it can be as perfect as possible.

The essence of trading profits, this type of topic itself has no fixed answer, even if you know the answer to the question, it is just your own opinion. The fun of traders lies in trading.

I believe that many people will have the most direct answer to this question. Of course, profit is to buy low and sell high, sell high and buy low. This answer is not wrong, but it is biased towards the result and does not touch the root cause. In fact, trading in the trading market is human nature, and the essence of profit is to constantly try and make mistakes, and then capture the big market that is difficult to find but lucrative.

Many people think that there must be a correct method for trading, and they have worked tirelessly to research, try, and optimize for this. Then I went around in various technical methods, but the result was not satisfactory. In fact, the weapon of success in trading is not as difficult as people imagine, and it is even so simple that people will ignore it. Everyone always expects every transaction to be profitable, but unintentionally resists several small losses in exchange for a big profit, or they don't believe that the power of large profits can cover multiple previous losses. This is why many traders fail.

Trading itself is a process of trial and error. As long as you have the courage to accept continuous and limited losses, you will definitely be able to exchange for your own wave of profits. It's just that when designing losses and profits, we should pay attention to the winning rate and the profit-loss ratio. The establishment of the trading system should follow the principle of consistency, the time period is fixed, the loss ratio is fixed, and the indicator reference should be as simple and clear as possible to ensure that the trading signal is unique.

Gaining an edge in trading consists primarily of two things: the human and the system. The winning rate and profit-loss ratio in the system determine whether the transaction can be profitable for a long time. It is the entry and exit strategy that determines the winning rate and the profit-loss ratio. Making the entry point as accurate as possible can greatly increase the winning rate of the transaction, thereby reducing the cost of trial and error.

The method of selecting the entry point belongs to another topic, and I will not discuss it here today. Of course, each trader may have his own method of finding the entry point. As long as the method is suitable, matching the corresponding stop loss and profit, and appropriate fund management according to the winning rate, a trading system can basically be formed. It took shape. In addition, successful trading must also have a corresponding trading discipline. Because after the formation of the system, subjectivity is no longer important, and discipline and execution are effective means to ensure objective transactions.

The main body of the transaction is people, and the system is just a tool for people. Whether the final victory can be achieved does not depend on whether the tool is easy to use, but whether the trader can control the trading system well, abandon themselves, and achieve objective transactions.

What is the essence of trading profit? In fact, in the current market, most traders do not understand trading or the market. I think we can take apart such questions and explain them one by one, and we will definitely find the answer.

the nature of the market

1. Anything may happen in the market, so the essential attribute of the market is probability, not inevitability. Nothing is static. Unfavorable factors in the past may become favorable factors now, and vice versa. The market is always right Yes, (although I hate this sentence, there is no right or wrong in the market) don't argue with the market, the essence of the market is killing, and all market prices are illusory and empty, just do the fake show and do it for real.
The essential
analysis of the transaction matches the subjectivity of the transaction and the objective of the market operation, why make money? Because it follows the trend of the market; why lose money? Because failing to follow the market trend has nothing to do with right or wrong analysis or insider information, it all depends on whether your subjectivity is in line with the objective of the market, and how to make adjustments when it doesn’t. The reason is to deal with it first, only react to the moment, and always trade (bet) on the high probability side. Trading strategy and fund management are more important than analysis methods. In theory, any position can be traded, but the risk you bear It's just different from the size of the possible benefits.
the nature of probability

Because of uncertainty, short-term, single transaction results are uncontrollable, long-term, multiple transaction results are controllable. Probabilistic thinking belongs to statistical thinking. Investment itself is uncertain. Just imagine, if all prices are reasonable, who else can make money? It is precisely because everyone has a different understanding of probability that they will face the same Different people have different expectations and judgments about the price of assets, and as a result of their evaluation and calculation, different people have different expectations and judgments. Therefore, only when the price deviates will real investment opportunities arise.

The nature of profit and loss

The overall profit is greater than the overall loss. It is impossible to make a profit every time in a transaction. It is normal to have a profit and a loss. The loss of the transaction is inevitable and can be regarded as the cost of the transaction. An appropriate profit-loss ratio is a necessary condition, and the loss must be limited within a certain range. If the market is unpredictable, that is to say, every transaction seems to be the same, but due to changes in the environment, different times and different funds , Different people, the final results must be different, so that each transaction has its own unique personality. In this case, what is the meaning of the so-called technical analysis or value investment of fundamental analysis in the market? Isn't trading the same as gambling?

Not so, like professional traders who have made stable profits in the market, the reason why they make money is actually the probability advantage. Everyone knows the profit model of casinos. Why do casinos make money? Because the probability of the casino winning is higher than the probability of the gambler winning, even if this ratio is only 1% higher. From a single point of view, it is close to a 50-50 situation, and gamblers also have a high probability of winning, but as the magnitude increases and the number of times increases, the result will show that 100 times of betting, 51 times of losses, and 49 times of betting Earn, the ultimate casino win situation.

This is the power of probability advantage. The casino cannot guarantee that every money will be made, but in the long run, it will definitely make money. The same goes for the trick to making steady profits. What is the use of technical analysis and fundamentals? Their function is to help you understand the market, deal with it, and ultimately make you the party with the advantage of winning rate.

To explore the nature of trading profits, we must first understand the nature of price fluctuations.

The ultimate factor driving price changes is the balance of power between long and short funds actually participating in the transaction. This is especially true in a foreign exchange market where long and short are completely equal, purely speculative, and an absolute zero-sum game. No matter what kind of fundamental background you believe in, no matter what kind of technical analysis you conduct, market changes ultimately depend on how the trading funds that actually enter the market vote.

If there are more funds for buying orders, the price will rise; if there are more funds for selling orders, the price will fall. Even if there is a dealer to lure the long or the short, the price at any point in time is formed by the matching of long and short funds. Whichever direction has more funds, the price will fluctuate in that direction. This is a simple and timeless truth.

Therefore, to put it simply, the essence of trading profit is the dominant side compared with the strength of long and short funds entering the market.

How to follow? This is exactly the question that has been explored every day in the long history of financial speculation for more than 400 years, and it is another question that will never have a standard answer.

The essence of trading profits, I think, is self-discipline, or a battle with yourself.

What you have to face in trading is human nature and execution, what you face is fear and greed, and what you face is yourself. You will find that there are two selves fighting with yourself. With its own system and rules, orders have a framework. However, due to insufficient cultivation of my own human nature, due to the uncertainty of market conditions, the nature of pursuing perfection, the complexity of human nature, and the fluctuations in market prices. Therefore, even if there is a system, it will not be implemented, and the implementation will not be thorough.

In the end of the transaction, the more you will understand the importance of human nature. When you realize the transaction, you will find it very difficult to execute. If the problem of human nature is not solved, it is very difficult to make money. Generally, it is seen after the market. Money is so close to you, you can’t do it, and you don’t do it thoroughly. Becoming a phase problem that haunts itself.

The method of trading profits is against human nature, against the human nature of most people. So this is one of the reasons why the transaction is difficult.

The mentality is complicated, and most people lose money because the mentality is too complicated. Everyone has this experience. When you first start trading, you might still make money, make money in a daze, and even make a lot of money. After a period of time, after being taught a few times by the market, I realized my ignorance, so I found books by myself and went to the forum to learn. The result is that the more you learn, the more you lose money, and you will lose money no matter what you do. Losing money has become a normal state until you lose all your funds.

Stable loss is a habit, the more you do it, the more you lose, the market is the same as doing it right. What caused the steady loss? Human nature, human nature, human instinct. A normal thing becomes your speculative weakness in speculation, as well as your inertial thinking and behavior, a series of factors, causing you stable losses, how to do what you lose.

If you have been trading for more than 5 years, you ask him, what is the main reason for your loss? No one said it was because of technology, they all said it was mentality and execution. Everyone has their own favorite indicator or signal. The technology of trading is not difficult, what is difficult is to take a step forward.

When you make a stable profit, you will find that many people have the same or even the same concept of profit, but they say it differently.

Constantly restrain your own humanity, fight against yourself, and reshape yourself. When you beat yourself up, that is when you make long-term stable profits.

What is the essence of trading profit? Some people say that making money is true, but not all. Making money is the end of all trading paths, not the essence of profit.

I think this question requires logical reasoning, why do transactions, because I want to make money, how to make money? Make money by buying and selling to earn spreads, so how to buy? How to sell? where to buy where to sell This is a technical issue. After buying, what are the chances of making money? This is a matter of probability. How much I will lose is a matter of risk. If I buy it, how much I will make and how much I will lose is a matter of profit-loss ratio.

Trading is not that simple. Of course, all the paths of trading are for one purpose, which is to make money. This is very simple.

Trading (investment), the essence of profit, I think the short-to-medium term is due to poor expectations, and the long-term is due to poor valuations; because of expectations, there is greater uncertainty, and long-term valuation differences have greater uncertainty. Certainty.

Transactions are carried out by both parties, and both parties to the transaction obtain what they need through the transaction. If you want to make a profit through trading, the essence is to buy low and sell high. Trading itself is a game of probability. For a single transaction, it is possible to win or lose. There is no 100% thing. If we do not pursue the success of a single transaction, but pursue the overall success, then the answer It's out - opening a position is not the least important thing.

 Many traders hope to find certainty in the market, otherwise they lack a sense of security. But in fact, nothing is certain in speculative markets. The size of the stop loss depends on your expectation of the profit margin, and any step in the transaction cannot be completely separated and discussed.

The essence of trading is actually exchanging risk. All traders enter this market in an attempt to profit by taking on other people's risks. In the process of taking risks, losses are actually inevitable.

The essence of profit is to constantly try and make mistakes, and then capture the big market that is not easy to find but lucrative.

Many people think that there must be a correct method for trading, and they have worked tirelessly to research, try, and optimize for this. Then I went around in various technical methods, but the result was not satisfactory. In fact, the weapon of success in trading is not as difficult as people imagine, and it is even so simple that people will ignore it. Everyone always expects every transaction to be profitable, but unintentionally resists several small losses in exchange for a big profit, or they don't believe that the power of large profits can cover multiple previous losses. This is why many traders fail.

Trading itself is a process of trial and error. As long as you have the courage to accept continuous and limited losses, you will definitely be able to exchange for your own wave of profits. It's just that when designing losses and profits, we should pay attention to the winning rate and the profit-loss ratio. The establishment of the trading system should follow the principle of consistency, the time period is fixed, the loss ratio is fixed, and the indicator reference should be as simple and clear as possible to ensure that the trading signal is unique.

As long as the combination of win rate and profit-loss ratio is a positive expected value, then the rest is execution. So how to judge whether the expected value is positive or negative? Backtesting through a period of historical market, it is concluded that if the average winning rate is 40% (that is, if the average 5 transactions are successful 2 times), if the average profit-loss ratio is 3:1 (that is, 1 profit can cover 3 losses) ), then after calculation, it can be found that on average, for every profit, 2.5 losses are required, and the profit of 1 profit can cover the loss of 3 times, so each profit and loss cycle can earn 0.5 times of profit. This is a trading system with positive expected value.

With the above-mentioned process, and then executed well, it should be profitable.

The essence of trading profits, I think, should be planning. Or to be more specific:

1. After I enter the market, the trend proves that I am right, what should I do?

2. After I enter the market, the trend proves that I am wrong, what should I do?

No one can accurately predict the future market. The only thing you can use is the rules - consistent trading rules, which allow you to stand on the side of the big numbers in this probability game.

Profit is not obtained by your winning rate in predicting the market, but by "you lose as little as possible when you make a mistake, and earn as much as possible when you do it right".

Your purpose of buying is not to lose money, but to profit and make as much profit as possible: when the trend is favorable to you, you must be greedy and let the profits run; when the trend is unfavorable to you, stop fantasizing, To cut losses.

Most of my trading is "planned trading, trading plan": after the market, I will look at the trend and determine how to do it according to the rules, and what I do during the trading time is just to trade according to the rules. If I want to consider where to buy or sell during the fluctuations in trading hours, I believe that many times, I will also be at a loss.

I will not adjust my trading rules for a specific market. The only way is to stick to my own rules, no matter how the market goes, keep my bottom line of operation, and maintain the consistency of trading rules. Not all markets are under your trading rules. All should be profitable, you must understand and accept this.

The so-called consistency means that you follow your own rules at all times: the market and the outside world will not interfere with you, unless there is a large loss within the rules. Let me say one more thing after the fact, the definition of consistency is that as long as you stick to your own and are not swayed by the temporary confusion of others and the market, the market will reward you sooner or later.

When I was still unable to achieve "no surprises in ups and downs, just watch the market before the flowers bloom and fade", a senior who did a good job in trading once told me that at any time, as long as the funds are not allowed to draw back sharply, at the same time Stay profitable at your own pace, even if slowly, and the market will reward you sooner or later. Now I take it for granted, and didn't know it was rewarded more than once.

A mature trader will not think that there are unique secrets in trading. Even the most profitable trading strategies have long been public. The only difference between winners and losers is that they can resist the temptation of all times and abide by their own beliefs. , the others do not have any secrets.

Always think that people who make money have some unique secrets to count money behind closed doors. This market has existed for hundreds of years, and any feasible or infeasible profit methods have been thoroughly researched, and you can no longer find anything that has not been explored by the predecessors, so don't think you have any new discoveries, then More often than not, it is a self-woven trap.

If I say that the risk of the stock market is higher than that of the foreign exchange market, some people must say that the risk of the foreign exchange market is higher than that of the stock market. If I say that the risk of the stock market is not as high as the risk of the foreign exchange market, some people must say that the risk of the foreign exchange market is higher than that of the stock market. The volatility comes from the market, but the risk does not come from the market, but from your transaction, from whether you control the risk or not. No matter how low the risk is in the market, if the risk is not controlled, the risk will be infinitely magnified. In a market with high risks, if you know how to control risks, the risks will be greatly reduced.

If you can't control the market and you can't control your own transactions, there is no greater risk than this.