Introduction:

Only by bravely analyzing oneself can one elevate one's trading to a higher level. When we review our transactions one by one, there are both successes and failures. On this basis, we attempt to find a pattern: what are the common characteristics of our success? What are the recurring factors in our failed transactions? This article is a trading strategy and principles developed by a trader several years ago, which have achieved good results in the implementation process, but there are also some issues that need improvement.

Section 1: Strategy

1、 Only participate in markets with strong market trends or where the main trend is forming, recognize the current main trend of each market, and only hold positions that are in line with this main trend direction, or do not participate.

2、 Assuming the direction of the transaction is consistent with the market trend, establish a position based on the significant price difference generated by previous or subordinate trends, or establish a position at a moderate inverse position to the current main trend of the market.

3、 Operational strategies under different levels of market trend intensity:

1. When the market is in an active and strong period (with increased trading volume), the operational strategy at this time is "long long short short", and the operational tactic is "chasing the rising leader"

2. The market is in a period of fatigue and weakness (with shrinking trading volume), and the operational strategy at this time is "long short long long", with the operational tactic of "oversold is king"

3. The market is in a balanced box period (trading volume range), during which the operational strategy is "sell high and buy low", and the operational tactic is "chip distribution";

4、 Persist in holding market positions when favorable changes are formed, and do not quickly profit from counter trend trading; When the changes in holding positions are favorable, it is appropriate to increase the held positions; Unless trend analysis indicates that the trend has reversed and hit the stop loss level, hold on all the way If the market trend is opposite to the expected direction, it will quickly escape.

The systematic and objective methods of risk control and constraint include four aspects:

1. Limit the risk of each trading position.

2. Avoid transitional transactions.

3. Cut off loss.

4. If there is suspicion, close the position and leave.

5、 Adhere to a dual strategy, namely: being a long-term shareholder in profitable positions; He is a short-term trader in the opposite position.

6、 The principle of profit is to maintain the stability and sustainability of profits, rather than maximizing them.

7、 After losing all battles, reduce the market position or stop trading.

8、 Not setting a target price for entering and exiting the market, only following market trends; Do not buy because the price is too low, nor sell short because the price is too high.

9、 Not entering the market out of impatience, nor closing positions out of impatience; When entering the market, one should wait for opportunities and avoid buying and selling too closely.

10、 Without appropriate reasons, do not change the buying and selling strategy of the stocks held.

Section 2: Principles for the Use of Funds

1、 Principles of fund management:

1. When buying or selling in the market, the loss should not exceed one tenth of the funds; Not excessive buying and selling.

2. When buying or selling to attract losses, never increase the price.

3. The size of the position is consistent with the market conditions. When the market is in a state of equilibrium, there should be less participation, while when the market is in an active state, there should be more participation.

4. The size of the position is consistent with its own status. Once there is a continuous failure, it is necessary to be vigilant and reduce the position until the exit and rest.

2、 Position control principle:

（1） Never fill the warehouse and always maintain a reserve fund of over 30%.

（2） Based on the overall market risk coefficient, determine the level of position. If the current market risk coefficient is 70%, then the position should be 30%.

1. When there are risk-free opportunities in the market, capital operations can be amplified;

2. When there are opportunities for short-term trading in the market, it is advisable to heavily invest in short-term trading;

3. When there is an opportunity for a premium stock market trend in the market, it is possible to operate a three position medium-term position;

4. When there are opportunities for technical analysis in the market, it is advisable to engage in light short-term trading.

（3） According to the two investment models of medium and short cycles, determine the division of funds and divide the overall funds into two equal parts: 60% and 40%.

3、 Principle of adding warehouse:

1. The use of the first 1/3 of the funds: In times of general downturn, that is, at the end of the downturn, short-term operations are mainly focused on fast in and fast out, selling high and buying low. Operate on some oversold or start-up stocks. After buying stocks, if the overall trend is clear, you can hold them in the middle line. Otherwise, you can take profits in the short term.

(1) After establishing a position, if an error is discovered, stop loss immediately.

(2) After establishing a position, it is uncertain whether it is right or wrong. Hold the position and wait, but the waiting time should not be too long.

(3) After confirming that the first fund has been profitable, hold the position and wait for the second opportunity to intervene.

2. The use of the second one-third of the funds:

(1) When the first fund is in a profitable state and there is no risk left, the second fund can be used. At this point, it is advisable to choose stocks with clear bottom volume and hold them in the middle line.

(2) After establishing a position, if an error is discovered, the first fund will be immediately stopped from winning, and at the same time, the stop loss level for the second fund will be strictly enforced.

3. The use of the third one-third of the funds: This fund can only be invested when the current two funds are in a profitable state and the overall trend is clearly improving.

Strictly follow: trend theory, follow the trend, sell high and buy low, short-term operations, fast in and fast out.

4、 Individual stock combination principle:

1. Do not hold more than 5 individual stocks at the same time, and the core individual stocks must not exceed 3 (2 for mid line stocks and 1 for short-term stocks).

2. The amount of funds allocated to each stock depends on the trading system's assessment of the position of each stock; If multiple systems with different strategies are used simultaneously, it also depends on the target expected annual return rate of each system.

4、 Segmentation principle:

The buying and selling of the same stock are segmented, and system traders based on trend based strategies need to establish multiple buying and selling points.

Section 3: Principles of Risk Control

1、 Always set up a stop erosion position when entering the market and strictly follow it.

2、 Never let a mistake claim spiral out of control:

1. The best way to operate when there is a bearish trend in the market due to a downward trend and low trading volume is to hold the currency and wait.

2. In the absence of clear market opportunities, it is advisable to deduct half of the funds ready to enter the market and settle half of the individual stocks that have already been trapped and have no hope of rising, in order to avoid the continuous expansion of past mistakes and make them irreversible. This situation cannot happen under any circumstances.

3、 Two reasons for stop loss:

1. The trading system issues a stop loss signal; 2. The reason for buying stocks disappears.

4、 Control of stop loss price:

1. In a downward trend, the stop loss level should be within 5%. Pay special attention to the infinite bearish trend, which can give people the illusion of stopping the decline

Fantasy leads to the loss of opportunities while waiting and waiting in fantasy.

2. In an upward trend, the stop loss range can be appropriately relaxed, such as 10% (excluding handling fees), and can be further relaxed to 12% if there is a contraction or long bearish trend.

3. There is no need to set a stop loss level for stocks that have experienced a sharp drop in sales, and it is important to sell them immediately without any hope or replenishment.

5、 Setting of stop loss level:

1. Usually below the previous local small bottom, based on the closing price, to avoid being cleared out prematurely by intraday fluctuations.

2. When the stock price is moving in a favorable direction, use follow-up stop loss and set the 3- or 5-day moving average (which signals earlier than the trend line) or 3% below the previous day's closing price.

3. When there is abnormal trading volume without a breakthrough, cancel the original protective stop loss and place it at about 2% below the closing price of the day.

4. Speculative operations should follow the trend, and the stop loss point can be set further away from one's own price to prevent oscillation. Generally speaking, the distance between them should be greater than 4% and less than 10%.

5. For speculative counter trend operations, the stop loss point should be set closer to one's own price, generally not exceeding 5%.

6、 Time principle:

1. Holding time: The holding time for short-term operations shall not exceed 20 trading days; The median holding period is 2-5 months.

1. Resolutely clear the expected profits within the specified time.

2. If the expected profit is not achieved within the specified time, the warehouse will be resolutely cleared. In special circumstances, if it is deemed necessary to continue holding based on market conditions, 1/2 of the position must be exited first to prevent potential adverse and passive situations caused by misjudgment. The remaining 1/2 position must be exited within the prescribed range.

3. If a loss occurs within a limited time, but the loss situation does not meet the expected closing line requirement, 2/3 of the position will be taken out to prevent the overall fund loss from reaching the closing requirement, and the funds taken out will be used to appropriately replenish the low-priced position.

4. If the profit is completed ahead of schedule within an unlimited time, 2/3 of the stock will be released, or the total capital of the released stock will be the invested principal.

5. If the expected profit is completed ahead of schedule within an unlimited time, the total amount of funds released from the stock is the sum of the principal and the expected profit. Others can continue to be held.

6. If there is no profit or loss within the expected time, it will be eliminated in one go.