Introduction: Although the prerequisites required for short-term traders and long-term investors are different, they must both be logical and able to provide effective assistance. Traders and investors should spend more effort before buying, rather than spending hundreds of thousands of yuan for a ridiculous reason
1. Survival comes first
This is not a clich é, speculation is a very dangerous activity. Speculation is not as simple as winning or losing. The primary task is to survive in the fluctuations between the peaks and valleys. If you can't even survive, you have no chance of winning.
Even with good fund management, proper systems, and the premise of action, there is one very important thing: control yourself.
The first requirement for survival is that all your transactions must have a basis. Rumors, reminders from others, good weather, or feeling good today are not enough reasons to be the basis for trading. This basis should be based on facts or reasoning in order to become a prerequisite for your actions.
The prerequisites required for short-term traders and long-term investors may differ, but both must be logical and able to provide effective assistance. Traders and investors should put in more effort before buying, rather than spending hundreds of thousands of yuan for a ridiculous reason.
It cannot be denied that there are certain methods and theories that can tell you how, how, and when the market will move, but these useful methods are not many. More methods and theories in the market are ineffective. Before entering the frenzy of financial markets, it is recommended that everyone spend enough time to understand these key things.
Even with good fund management, proper systems, and the premise of action, there is one very important thing: control yourself.
2. Everything is ultimately a game of emotions
Whenever it comes to your money, your blood will boil, your palms will sweat, and your nervous system will be filled with various absurd emotions, resulting in a short circuit. This means that many traders are still buying when they should have sold; Or it may be because of their fear that keeps them away from opportunities that could have been great investments and trades; Perhaps their bet was too big, making them feel a little scared. At this point, decision-making becomes a servant driven by emotions, while rationality and logic disappear.
3. Greed prevails - proving that you are more driven by greed than by fear
If you consider yourself a speculator, it means a simple fact: you should have less fear than the average person. Your driving force is to make money and profit.
Speculators are easily driven by greed, which makes greed their most fatal weakness. Greed makes people hold unrealistic hopes, driving you to continue holding positions that have already incurred losses. And hope is the worst enemy of traders, often leading people into dreams of huge profits and forgetting the true face of the real world.
The world of speculation has a cruel reality, where huge losses can leave people with nothing, marriages shattered, and families falling apart. Larry always takes these issues very seriously to warn himself not to be blinded by greed and to help him exercise self-control. Everyone has different ways to deal with their own greed, and Larry's own approach is just a reference. But he emphasized that in order to survive in the market, one must be able to control oneself.
4. Fear makes you want to escape - but sometimes you have to take risks
Fear makes people want to escape and stop doing what they should have done. Fear allows you to escape profitable trades and makes you hesitate repeatedly in the face of losing positions. Fear often leads people to do things they shouldn't have done, but makes them afraid to do things they should have done.
Psychologists believe that fear often causes people to lose their normal response when facing danger. Speculators are like deer illuminated by the headlights of a speeding car, they see danger approaching but are unable to make any necessary response.
Even worse, they may miss out on profitable trades. Why? According to Larry's own experience, the more likely it is to become a big profit opportunity, the more the process of holding a position makes him nervous. He said many investors were scared away by himself.
Good fund management is essential for creating wealth
Larry Williams is best known for his trading performance when he won the Robbins Cup Futures Trading Championship. The Robbins Cup Futures Trading Championship is a real money trading futures competition that lasts for 12 months, with an initial capital of $10000 for traders. Larry Williams achieved astonishing returns of over 100 times in just 12 months, with his funds reaching over $1.1 million by the end of the game.
For many years, people have been constantly asking Larry about his experience of success, and Larry is also happy to answer. Larry said that his success did not rely on any great trading ability, but on a well planned and aggressive way of managing funds. Larry effectively managed and controlled the buying and selling of positions as well as the financial situation.
Ten years later, Larry's 16-year-old daughter also participated in this competition, with a final profit and principal of $110000, and successfully won the championship (this is the second best result in the 20-year history of the Robbins Futures Trading Championship, second only to Larry's own record). Larry claimed that her daughter did not have any trading secrets, any magical charts, lines, or formulas, and only used a trading system with excellent fund management planning.
6. Large funds are not used for placing large bets
Larry mentioned a type of trader, including Jesse Livermore John Warne Gates、 Victor Nidhoff and Frank Joe both belong to this type of trader. They have all had glory, but ultimately lost to big money and big bets.
Smart use of funds, never bet too much. The loss caused by taking a desperate gamble will lead to your downfall in the market. Remember Larry's first saying: survival comes first.
Just like Russian roulette, you may think you have won many times but haven't lost yet. But if you bet on it for a long time, the ultimate result is only one: death. In speculative markets, it's the same. Long term big bets will only make you a loser in the end. Blindly hitting and rushing is destined to be a loser's game, and this approach is destined to lead to the failure of traders. Larry claims that he never invests too much money himself, and only invests a small portion of the funds in his account each time, which is an effective way to control losses.
7. Starting from the expectation of losses
Larry believes that as a trader, his greatest wealth and belief is that he always starts from the expectation of losses. Most people always expect the next transaction to be profitable, but unfortunately, the reality is often the opposite. Some people even participate in certain activities or specialized training to help maintain optimism. They also attend courses to tell themselves that the future is bright, and they firmly believe that their next trade will be successful.
Larry, on the other hand, is the completely opposite person. He always thinks about bad expectations first. He once asked the interviewer these questions: Compared to this type of person, who do you think would take the right action in the market, and who would act on irrational thoughts in the market? Larry commented that blind optimism is not feasible in the market, and such people cannot take action correctly and timely. And my starting point always allows me to take measures to protect myself in various situations.
Your wealth will come from your focus
Larry believes that a person who travels through all trading markets can never become a successful trader. Why? Because traders need to focus on the market and pay attention to many details that happen without having time to look around. Distraction in trading can bring costs. Distraction may cause you to miss an important transaction or result in significant losses.
Focus, in Larry's view, not only means focusing on the current task, but also means that the trading perspective should be focused on one or two markets or on the use of trading methods. Like those great athletes, they must have their own specialized projects; The greatest achievements of artists are also limited to a few fields. Regardless of the profession, the higher the level of focus, the greater the achievements that can be made.
When hesitating, confused, and unable to make a decision, please refer to the first point
