In contract trading, technical analysis and money management are certainly important, but what often determines success or failure is the trader's mindset. Many people have a perfect trading system, yet they repeatedly break the rules due to emotional fluctuations: being greedy during profitable times, fearing losses during downturns, and delaying stop losses during bouts of luck, ultimately leading to system failure and account losses. Experienced traders generally agree that emotional stop losses are more critical than technical stop losses. The core of long-term profitability in contracts is essentially a game against one's own human weaknesses.
Human greed is the primary obstacle to profit. When the market rises, traders are often swayed by the thought of 'just a little more before closing' and continually raise their profit-taking expectations, ultimately missing the best exit opportunity, even turning profitable trades into losing ones. Wang Lu mentioned in her sharing that she was once trapped due to hesitation in hedging risks, which is the result of a mix of greed and luck. The key to dealing with greed is to set clear profit-taking rules in advance: either take profit at target levels or use trailing stops to lock in gains. Once the profit-taking signal is triggered, it must be executed unconditionally. At the same time, one must understand that no single trade can capture all the market's profits; accepting the norm of 'not selling at the highest point' can help avoid the backlash of greed undermining profits.
Fear is the amplifier of losses. When the market fluctuates in the opposite direction, many traders panic and close their positions due to fear, turning small losses into large ones; when the market is in a consolidation phase, fear can also cause them to miss reasonable entry opportunities. The core of overcoming fear is to establish trust in the trading system. When you have validated the effectiveness of the system through historical data backtesting and clearly know the risk and reward probabilities of each trade, you will not be swayed by fear caused by short-term fluctuations. Moreover, controlling the time spent watching the market can effectively alleviate fear, such as only operating during active periods of the main contracts to avoid emotional interference caused by prolonged observation.
An effective method for cultivating the right mindset is to maintain a trading journal and review it regularly. The trading journal should not only record technical information but also note the emotional state during each trade, whether it is anxiety, excitement, or calmness. Behavioral finance studies show that investors who consistently keep trading journals have an annual return that is 6.2 percentage points higher than the control group. Through reviewing, you can clearly identify the negative impact of emotions on trading, such as which losses were caused by greedy chasing of prices and which profits were gained by calmly following the rules. Over time, you will develop a conditioned reflex, allowing you to remind yourself to return to the rules when emotions are about to spiral out of control.
A more advanced mindset cultivation is to accept the uncertainty of the market. No trader can predict the market 100% accurately; even the most sophisticated trading systems can incur losses. Long-term profit-makers understand the need to allow for losses within the system, not to deny the entire system because of a single failure, nor to increase risks due to consecutive profits. They understand that trading is a marathon, not a sprint, and the short-term fluctuations in profits and losses are insignificant; long-term stable profits are the ultimate goal. When you can truly achieve 'not rejoicing in gains, nor grieving in losses', and use rationality to combat emotions, profits from contracts will naturally become a norm.
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