Losing 50% of 1 million is equivalent to 500000, and increasing the value from 500000 to 1 million requires a profit of 100%. Every success will only make you take a small step forward. But every failure will make you take a big step back. It takes an hour to walk from the first floor to the top floor of the Empire State Building. But jumping from the rooftop, it only takes 30 seconds to return to the bottom of the building. In trading, there are always unexpected things that can cause you to incur losses. The simplest way to determine whether a stop loss is necessary is to ask yourself a question: if you haven't established a position yet, would you still be willing to buy at this price. If the answer is negative, sell immediately without hesitation.
1. Operation against the trend is the beginning of failure. We should not confront the market or try to defeat it. There is no need to be smarter than the market. When the trend comes, respond accordingly. When there is no trend, observe and remain calm. It's not too late to take action after waiting for the trend to finally become clear. This will lose a small number of opportunities, but it will win the safety of funds. Your goals must be aligned with the market and follow its trends. If you align with the market, profits will naturally roll in. If you read the trend wrong, you have to use an ancient and reliable protective umbrella to stop erosion. This is the relationship between trends and profits.
2. The two most basic rules for successful trading are stop loss and holding. On the one hand, cutting off losses and controlling passivity; On the other hand, before the profit trend is fully realized, it is not easy to appear, and it is necessary to ensure that profits grow sufficiently. If you buy the right one, you also need to know how to sit still, regardless of the wind and waves, it's better than strolling leisurely in the courtyard. The key to trading is to continuously grasp advantages.
3. Quick claim recognition is an important principle in short market trading. When the position suffers losses, be sure not to increase the risk and fight again. Do more and make more mistakes, do less and make fewer mistakes, not doing anything is good. In an obvious reverse market, if you refuse to exit due to fear of small losses, you will eventually suffer big losses.
4. It is always right to close a position at any time when trading a variety that is struggling in a medium to long term reverse trend. The passive holding of waiting for its bottom or top is dangerous because it may not have a bottom or top at all.
5. Learn to allocate funds in batches. Once there is a loss in the first entry position, the first principle is that it cannot be increased. The initial loss is often the smallest loss, and the correct approach is to appear directly. If the market continues to be unfavorable for the initial entry position, it is a poor transaction, and no matter how high the cost is, immediately recognize the loss.
6. People who hope to finish at the bottom or top in one go will always get a hot potato. There is no need for small funds to strategically build positions, and there is no need to prepare in advance for unknown market trends in the coming year. There is no need to go through all the hardships with the main force. In a clear downward trend, a small rebound of 20-30 points is not worth getting excited about or participating in. Only by doing something can we do something. Taking more actions does not necessarily guarantee good results. Sometimes doing nothing is the best choice.
7. Don't worry about missing out on opportunities, good hunters must be good at waiting. When there is no big opportunity, be quiet like a stone. The way of trading lies in patiently waiting for opportunities, patiently waiting for the most favorable risk/reward ratio, and patiently seizing opportunities. In the reverse market, there are always some institutions that hold onto other people's money, even if there is only a glimmer of hope, and desperately seek opportunities to struggle and break through. We are holding our own money, so we should cherish it even more. Don't blindly test the bottom, let alone blindly copy the bottom.
8. You should know that both the bottom and top are the areas most prone to losing big money. When you feel confused, do not make any trading decisions. There is no need to force a trade if there is no appropriate market trend. Don't force yourself to enter without a high chance of winning. Only when the overall direction is correct can one confidently engage in battle. We should win first and then seek victory, not fight first and then seek victory.
9. The core of speculation is to avoid uncertain trends as much as possible. Before taking a confident action, buy yourself another insurance (stop loss level to get out) to prevent subjective errors.
10. To engage in trading, one must have the ability to start over again, including funds, confidence, and opportunities. You can be defeated by the market, but you must not be eliminated by the market. We came to this market to make money, but this market is not a fully automated teller machine. Investment requires timing and skills. Opportunities don't come every day, and even if they do, not everyone can seize them. Learn to analyze the opportunities you are good at seizing, and use your strengths to attack their weaknesses. In ten trades, even if you fail six times, as long as you keep the losses from these six trades within 20% of the total trading capital, even if you make three small profits to make up for the 20% loss of the entire trading capital in the remaining four successful trades, the remaining big profit will still make your returns not low. You cannot control the direction of the market, so there is no need to waste energy and emotions in situations beyond your control. Don't worry about how the market will change, what you need to worry about is how you will respond to the changes in the market.
11. Judging right from wrong is not important, what matters is how much profit you gain when you are right, and how much loss you can bear when you are wrong. Before entering, calm down and think more. Think about how many professional skills you have to support yourself in the market, whether your mentality can withstand the ups and downs of big waves, and whether the limited funds in your pocket can cope with unlimited opportunities and losses.
12. Avoiding risks is the safest option. The most important factor for successful trading is not the set of rules used, but your self-discipline. Time determines everything. Life is not just a battle of strategy, to some extent, it is also a competition between time and life. Buffett lived for another 10 years, and even with only 5% sustained profit each year, his total wealth growth was enough to make him proud of the world.
