Today, a senior trader shared some thoughts, and I specifically want to share them with everyone.
1. The Core Logic of Trading
Real traders only care about two things:
1. How do I act when the market proves me right after buying;
2. How do I act when the market proves me wrong after buying.
No one can accurately predict future market trends; the only thing you use is rules—consistent trading rules, which allow you to stand on the side of the big numbers in this game of probability.
Profit is not gained by predicting the market’s win rate but relies on 'when you are wrong, you lose as little as possible, and when you are right, you gain as much as possible.' This is the biggest difference between practitioners and analysts.
2. The Market and Timing of Trading
When is the market direction clear? It is never clear! The market’s trend at any time is a gamble with your own chips; although many friends never think they are gambling, they merely believe that a high probability does not count as gambling.
In fact, nobody knows how tomorrow will go; trading is placing bets, wagering certain costs against uncertain profits, but staying away when the risks become fatal; when the risks are controllable, the future is worth betting on.
Most of my trading is 'plan my trade, trade my plan': I look at the trends after the market closes to determine what to do according to the rules, and during trading hours, I simply trade according to the rules. If I were to consider where to buy or sell during the fluctuations of trading hours, I believe many times, agreeing with myself would leave me at a loss.
I have never believed that specific entry points play a significant role in trading; only those who pursue small profits focus on precise entry points. Trading that does not pursue small profit swings places too much emphasis on specific entry points, which can lead to losses and missing out on more opportunities and profits.
The specific entry point will not be the focus of my trading. Every day, I look at the day’s and previous trends after the market closes, use my experience to judge a direction, find a price range I deem appropriate, and then buy and hold. I never spend much energy researching exactly where the price will stop, yet many people emphasize how important specific entry points are in their trading.
If the precise entry point occupies a critical position in your trading, and you are not pursuing small profits from swings, it only indicates that you do not understand what a trading strategy is; you may not even understand how market trends are generated, let alone what you are supposed to operate.
3. The Misconception of Precise Entry Points
The reason you place so much importance on precise entry points boils down to a few reasons:
1. You always hope to buy at the lowest point, hoping for immediate profit and cannot tolerate normal price corrections;
2. You think stop-loss is a disaster, so you always set the stop-loss very small.
You just ignore that the importance of buying in a range, whether higher or lower, is far less important than simply not buying. Yet, many people miss opportunities in the face of high probabilities of rising prices just to pursue precise prices.
The most foolish person in this world is the one who thinks they have discovered a truth that others cannot find. I never expect to buy at the lowest point or sell at the highest point. One key reason many people cannot achieve overall increases in capital is that they cannot withstand the pullback of floating profits. In fact, floating profits are not your profits, and no one wishes for profits to pull back. Losing some profits due to a pullback can also lead to capturing greater profits; this is an indispensable part of the trend, and one must learn to get used to it in trading.
The amount of loss is something you can control; profits require the market’s support. Buying or selling is not based on your assumptions but should be determined by actual market movements. At any time, I will not let myself fall into a passive position, nor will I ever pursue perfect trading.
Regardless of what rules you use as your trading model, you must consider one point: whether this rule or strategy can achieve capital growth over a relatively long period, rather than using isolated trading days or the randomness of a specific trade as your basis for trading!
Do not adjust your trading rules for specific market conditions; the only way is to stick to your own rules, regardless of how the market moves. Maintain the consistency of your trading rules, and it does not mean that all market conditions should be profitable under your trading rules. You must understand and accept this.
Consistency means you follow your own rules at all times: the market and external factors do not interfere with you, unless there is a significant loss within the rules. To put it more plainly, the definition of consistency is that as long as you stick to your own rules and are not confused by others or the market, the market will eventually reward you.
4. Characteristics of Mature Traders
A mature trader does not believe there is a unique secret to trading; even the most profitable trading strategies are already public and commonplace. Learning them and applying them to build your own trading system to trade independently is the only difference between winners and losers; there are no other secrets.
Many friends have told me about various difficulties, wanting to make some profit through trading. I shared all my trading strategies with her; she knew where I bought and bought there too, my trading was completely transparent to her, but after some time our trading results were very different. This is because she always gets lost in the temptations of the market, unable to withstand fluctuations—worried about missing out and buying too early, or wanting a lower price but not buying, or worried about selling late and selling early, or holding too many fantasies and selling late.
