As long as you enter the game of trading, I think everyone will know the factors that determine our sustainable profitability. Presumably everyone is familiar with it. I think it is the following three factors.
The first element is risk. Risk is the so-called transaction cost. This cost includes many, both direct cost and indirect cost. As the name suggests, direct cost is how much money is directly lost; while indirect cost is relatively invisible and attracts attention. The degree is relatively small, but it is a cost that cannot be ignored. It is generally composed of time cost, energy cost, inflation cost, health cost, etc.
The second element is the chance of winning. According to Sun Tzu's Art of War, the chance of winning should be considered from five aspects, Tao, heaven, earth, general, and law; similarly, trading also starts from these aspects, whether it conforms to the general trend, whether it is long-term or short-term, We must be clear about whether we conform to the general trend; secondly, the time factor. Sometimes, although we are in the general trend, we are not fully prepared in all aspects and do not consider the time factor. The third is whether the shape is beneficial to us, whether the traders have the courage to execute, and the analysis. Whether the details are clear and there is no ambiguity;
The third element is the goal. Whether it is odd to win the small and the big, or to use the positive sum to concentrate the advantages and win the small with the big, it is our goal;
If you understand the three factors of profit, I believe everyone will look for a structure with low risk, high probability of winning, and high return. Many new transactions entering this market do the same. They are looking for the perfect transaction, but there will always be I found that the real-time situation basically did not appear, but after the market happened after I missed it, I found out that the perfect entry point they were looking for has become history. It is not difficult to think about this problem. This market is full of smart people. They are institutions or professions. Traders, what we know they will know too, so don't try to get your opponent on the wrong side; if you have an 80% chance of winning and are only willing to lose 1 unit and make 10 units of money, then your opponent I just want me to take 20% chance of winning, take 10 units of loss, and only make 1 unit of money; I think no one except lunatics is willing to do this, or we are fools. But what if you need to have an advantage in order to continue to make a profit?
Example:
For long-term traders, for example, in 2008.9, Buffett bought 225 million shares of BYD at a price of 8 Hong Kong dollars per share. Just when the financial crisis happened, the stock price was relatively low; regardless of the situation, the selection of people, and the timing of the selection, they were all superb. So what is the risk? The risk is that the company is replaced or eliminated by other competitors, or the market is affected by the global financial crisis. Sentiment has been depressed for a long time, global risks have intensified, and the stock price has been low for a long time; he needs to pay a long time cost, but investors are willing to bear it; they are willing to believe in the advantages of their model.
Buffett’s construction model is still to construct the five factors of the chance of success, but the angle of entry is different. In fact, it still leads to the same goal, starting from the overall situation and looking to the future; taking the trend and choosing the trend are different, so there is no absolute advantage, only a relative advantage.
How do pure chart traders build an advantage?
Knowing that there is no absolute advantage, then we must make a good choice, risks, odds, and goals cannot be combined, and we can only achieve relative advantages in balance;
Odds of winning: After the development of the investment market, our predecessors all made the same decision at the same time, the form affects the decision, and the decision affects the form, so some classic forms have a certain chance of winning; for example, in the trend market, retrace to dynamic Resistance, forming a reverse K entry, or forming a double-top structure, etc.; in fact, it is still inseparable, taking momentum, timing, structure, execution, and law. If one of them is missing, our chances of winning will be reduced;
Target: The target position should be the point where the market has consistent expectations, or has the ability to maintain an overall advantage. If it cannot be targeted, it is meaningless; it is usually a potential support or resistance point, or a certain calculation point, and it is necessary to make timely assessments at all times and risks , rather than taking it for granted;
Risk: It must be something we can bear. No matter whether the chart trading is long-term or short-term, the long-term risks that need to be borne will increase, and the goals will also increase;
From this picture, we can see that there is no absolute advantage. If we see a timely picture, it is almost difficult to make the best decision.
1 The continuous trend before K is a very strong trend. If we go short because of a single reversal K, we will make a wrong decision, because the upward trend is the correct direction, and the retracement of K is the entry of K. After that The area of doubt and stagnation continues to diverge upwards;
2 is the same as 1, a strong direction trend K, but we are still in an upward state, because the reverse movement trend is followed by consolidation K, and short selling is another failure. We may be on the wrong side again, but do From a simple point of view, our advantages are not obvious
3 If you have experienced the failure of 1 and 2, you have learned from 3 and followed the trend to do more, but you did not find that this is a three-push structure, and there is a high possibility of a double-line retracement structure. We follow the trend and choose the wrong one again Direction, because the timing is not enough
4 After a complex retracement, break through a support point, you thought you could go short, but unexpectedly this point is the trend recovery point; here is the dynamic support position and reversal K, different conclusions are drawn from different angles
5 The market has such a long reverse movement, and there is an upward gap, you finally seized an opportunity, but when there was a retracement to the entry position, you were out of the market, indicating that there is a problem with your execution and discipline;
6 There is a gap in the market, but you are popular with everyone, and you dare not go short at 6, because you think this is the trend, and it is your choice to retrace and go long;
7 is not only the second entry point for the rise and retracement, but also the second entry point for the fall, so you are very entangled and continue to fail to enter the market
8 You made a trade-off at this position and you started to choose a short-selling structure because you thought the rise had reversed, but you didn’t take me absolutely. You entered the market cautiously. You thought you had an advantage and chose a more reasonable stop loss. At least 2 times the risk value return, this time you did it, this is not a perfect entry, but it is indeed a reasonable transaction;
Summary: There is no perfect entry in trading. Even if you think it is a perfect entry, if the market finds that the market changes, those perfect entries may exit their positions and become your opponents. An advantage structure will follow Time changes; you have to evaluate the risk, the odds of winning, and the balance point of the target. If you have no advantage in holding a position, it is time to get out;
Add
