I came across an article online that resonated with me, and I’d like to share it with everyone!

If you have been wandering in trading for many years without results, I sincerely suggest you find a quiet place and patiently read this article.

Most people are eliminated by the market not because of significant losses but because, over the years, they fail to make progress and are eliminated by time. This can be more brutal than being eliminated by losses right away. After all, youth is irretrievable, and wasting too much time in trading can stifle countless possibilities in life. Many enter with enthusiasm but exit near a dead end. These harsh realities have always prompted me to reflect on a question: how to grow more efficiently in trading to avoid the dull knife of time? In our team, there’s an unwritten minimum standard for judging whether a trader can make a living from trading: can they afford a house in Shanghai through trading? Several team members have met this standard, and some have far exceeded it, pursuing even higher goals. Comparing these relatively successful traders with those eliminated by the team or market and reflecting on my own experiences, I have distilled three elements to explain how to grow more efficiently on the trading path:

1. Preconditions for successful traders.

Second, what must one subjectively do?

Third, strive for external conditions.

Let’s first discuss the first precondition.

Two points, simple yet not easy to possess:

First: reserve ample time and funds that do not affect normal life.

Trading is not achieved overnight; it will definitely involve repetition, stemming from both personal and market reasons. A short-term trader with great talent, with the market cooperating, takes at least half a year to a year to grow. A swing trader needs one to two years to accumulate experience and hone their mindset. If one has not prepared enough time and mental readiness, being eager for quick success will likely backfire. In trading, fast is slow, and slow is fast; not being in a hurry to make money but focusing on understanding market rules, building a system, and improving the details of weaknesses can yield results faster. Many believe that taking desperate measures will lead to survival; this may work in other industries, but in trading, it is more likely to lead to a grave outcome. A calm mindset usually comes from not being financially strapped; money is courage, and with financial backing, one will act much more composed. Trading requires a more composed and peaceful mindset. Conversely, if one is anxious about survival and eager to turn things around, the trading results will only worsen. One must either reserve enough funds for regular expenses or have a stable cash flow. I consider myself an experienced trader now, but I still have income outside of trading, which alleviates the urgency to make money in trading and allows for a more objective view of the market and greater patience in waiting for opportunities.

Second: develop a complete, solid, and clearly defined trading system that suits oneself and has advantages.

Look, I’ve added so many qualifiers, which indicates that this is a high threshold. A trading system is like a manual for operating a complex machine, providing us with a basis for each step rather than letting us act at will. A complete trading system must include at least five aspects: directional judgment, entry techniques, profit-taking and stop-loss, capital management, and emotional management. Once the system framework is formed, it must be solidified and not change repeatedly, especially the underlying logic; otherwise, it will become unrecognizable, gradually eroded by the market. Every step in trading must be detailed and clear; ambiguous elements will significantly reduce execution. The system must also suit the trader; everyone is a unique lock that needs a unique key to match, as each person’s personality and risk preference are different. Even if the underlying logic of trading is similar, the applicable levels and execution methods will vary. There is no best system, only better matches. Lastly, this system must have a certain overall advantage in win rates and payoffs against the market, which requires the system to be built upon some solid underlying logic, necessitating an enhancement in cognitive levels.

What does the trader need to subjectively do to improve the efficiency of success?

Discipline and risk control are paramount. Discipline, in other words, is the ability to strictly execute trading plans and systems, which is the premise for refining and evolving trading. Imagine trading at will without any consistent samples; how can one verify the system's advantages or flaws, and how can one build faith in the system? Even if it’s a wrong path, disciplined execution can help traders understand sooner. The worst is trading without discipline, erratically right or wrong, living in an illusion, ultimately leading to failure. Risk control is even more critical; survival is the prerequisite for becoming stronger. Another subjective measure to enhance trading learning efficiency is to think more, ask more, speak more, and practice more. Like in sports, the effort is often off the field. Trading has a process: from not understanding anything, to being able to comprehend part of it afterward, to being able to see but not grasp it during the process, and finally to understanding and being able to act. The difference lies in the degree of proficiency after clarifying market dynamics.

So how can one improve proficiency?

There are no other paths; practice more, review more, think more, and seek advice from more capable people. Among these, the most effort should be put into reviewing past trades, analyzing both the best and worst market conditions, searching for underlying patterns and response methods. Once familiar enough, everything will come naturally. A friend of mine who does macro analysis repeatedly reviewed the performance and dynamics of major asset classes during each crisis moment for five or six years before making a breakthrough. Finally, in March 2020, when the global pandemic struck, he accurately captured the rotation of major assets, resulting in a tenfold increase in assets within a year. This is the reward for mastering review. To fundamentally improve execution power, the most needed enhancement is cognitive ability.

There are two basic methods for viewing things.

One is summarization.

One is logical deduction.

Summarization is common; simply using some structural patterns to determine opportunities is also a form of summarization. However, this approach is hard to achieve strong execution power. You will find that some simple graphical rules may work continuously correct, but when changing the time and space, they may consecutively fail. It's hard to trust them, and thus hard to execute them. On the other hand, logical deduction can better find underlying driving forces; summarization goes from C to D, while logical deduction goes from A to B to C to D. When the logical driving chain from A to C is intact, the likelihood from C to D is also high. However, if the transmission process from A to C is disrupted or reversed, C likely won’t lead to D. Therefore, using deeper cognitive logical deduction methods to explore the chains of logical transmission and the mutual influence among different chains will help understand when having C allows capturing D, and when seeing C instead signifies a trap to avoid. Once recognized, it becomes hard to waver in behavior. Deep cognitive understanding can change behavior, while thinking more, asking more, speaking more, and practicing more can elevate cognitive levels.

The last thing one needs to do is: dare to succeed and be good at failing.

This can be said to be the traits of successful traders. Being good at failing goes without saying; it means effectively controlling risks during tough times. Being daring to succeed means taking full advantage of favorable market conditions, rather than settling for small profits. Good and bad market conditions cycle repeatedly, and the disparity between a good year and a bad year is significant. If one makes small gains in a good year, it will be difficult to endure in a bad year. This is the threshold that distinguishes ordinary traders from excellent ones. The year 2015, characterized by massive volatility in stock index futures, was when our team took off. Many traders underwent transformations that year, one important reason being that a trader with smaller capital managed to increase their funds from 300,000 to nearly 900,000 in just one day. Other traders with larger capital then realized: in a big market, funds can multiply several times in a day. Subsequently, they all seized such opportunities. Even though our returns in commodities were meager in 2016-2017, the substantial earnings in 2015 created a calm mindset among traders, contributing directly to our successful transition to swing trading.

Now let’s talk about the external conditions that need to be actively pursued, which can be summarized in three aspects:

1. Matching risk control.

2. An atmosphere for discussion and output.

3. Profitable benchmarks.

I have never believed that humans can completely overcome their weaknesses. Even as an experienced trader, I still encounter risky events every few months when I let my guard down. Along the way, I’ve seen many cases where traders were knocked out due to one or two risky events. More often, people work hard to accumulate some profits, only to lose everything in one impulsive moment, then regroup and repeat the cycle, continuously regressing.

How to solve this problem?

There needs to be matching risk control. This matching has two layers of meaning: first, one needs to understand the advantages and disadvantages of the trader's system, knowing when to tighten and when to loosen; second, one needs to have control over the trader, especially those who have already achieved results. Filtering these two conditions highlights the difficulty in finding matching risk control, comparable to finding a suitable partner. Some have found suitable risk control; I know of a small trading group of three: one analyzes, one trades, and one manages risk, with clear division of labor and mutual checks, developing quite well. Some find their partners to manage risk, which is also fairly effective. The risk control within the team is naturally the most effective, as it understands trading and executes well, effectively safeguarding the traders. Some traders lose stability in performance after leaving the team, which is somewhat related to risk control. The second external condition to strive for is: to have an atmosphere for discussion and output, and it’s even better if this atmosphere has a certain level.

On one hand, expressing oneself requires clarifying one's thoughts sufficiently, while on the other hand, problems that one cannot see or solve may be trivial to the recipient, which greatly enhances the efficiency of the outputter. In our team, everyone has to repeatedly present their trading cases every week, from high levels to low levels, covering direction, entry points, profit-taking and stop-loss, and capital management. Every step's logic must be clear, and this process greatly benefits beginners.

Finally, an external condition that can enhance growth efficiency is: stay with winners. If surrounded by losers, the end result is likely collective failure; if surrounded by profitable people, having benchmarks becomes significant, and one’s beliefs change because nobody is inferior. If others can make money, why can’t I? If one cannot distill unique methods, at the very least, one can learn from benchmarks, and a single effective point from an experienced person can outweigh long periods of painstaking exploration. Trading is a profession with low win rates and high payoffs. To become one of the few successful ones, one must cultivate both internally and externally to enhance growth efficiency, and not wait until old age to regret.

I hope the above content can inspire traders on their journey.

Lastly, interested friends are welcome to join my chat room for communication and learning! https://www.binance.com/zh-CN/service-group-landing?channelToken=xsCNCzhDZrNnVtVU2hyexg&type=1