A trading logic that can stabilize profits is a good trading logic.
There are a thousand Hamlets in a thousand people's eyes.
JeRry的加密日記
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Today I want to discuss a topic: The Essence of Trading Systems
1. The Underlying Logic of Triangle Patterns
In quantitative trading models, the "triangle pattern" is essentially a three-dimensional deconstruction of traders' perceptions of market volatility characteristics:
1. Frequency Dimension: Decision density within a unit of time (high frequency/low frequency)
2. Risk Dimension: Profit and loss ratio threshold per trade (conservative/aggressive)
3. Time Dimension: Volatility exposure of the holding period (short-term/long-term)
In the three-dimensional coordinate system formed by these three variables, any trading system must encounter the "impossible triangle": as trading frequency increases, the profit and loss ratio per trade must decrease; if a high win rate is pursued, the holding period must be extended. This nonlinear relationship determines that the choice of trading model is essentially a matching issue between cognitive frameworks and personality traits.
Taking my own practice as an example, the construction of a short-term trading system follows three underlying principles:
1. Volatility Capture Mechanism: Trigger trading signals through a 0.5% volatility sensitivity threshold.
2. Leverage Constraint Model: Maintain a dynamic balance with a 10x leverage ratio and 5% position.
3. Trading Psychological Anchoring: The cognitive loop of "holding is risk," avoiding the psychological loss of long-term holdings.
In response to the criticism that "short-term trading cannot capture large market movements," a new cognitive framework needs to be established:
1. Volatility Arbitrage Theory: A one-sided market is essentially a phase imbalance of volatility, which can capture trend initiation points through multi-cycle resonance.
2. Risk Budget Model: Control single trade losses within 0.5% of total capital, allowing 100 trades to accumulate a potential profit space of 50%.
The essence of a trading system is the quantum entanglement between the trader and market volatility. When the cognitive framework and personality traits resonate, any model can potentially yield unique excess returns. As revealed by the turtle trading rules: a successful trading system is not designed but chosen.
1. The Underlying Logic of Triangle Patterns
In quantitative trading models, the "triangle pattern" is essentially a three-dimensional deconstruction of traders' perceptions of market volatility characteristics:
1. Frequency Dimension: Decision density within a unit of time (high frequency/low frequency)
2. Risk Dimension: Profit and loss ratio threshold per trade (conservative/aggressive)
3. Time Dimension: Volatility exposure of the holding period (short-term/long-term)
In the three-dimensional coordinate system formed by these three variables, any trading system must encounter the "impossible triangle": as trading frequency increases, the profit and loss ratio per trade must decrease; if a high win rate is pursued, the holding period must be extended. This nonlinear relationship determines that the choice of trading model is essentially a matching issue between cognitive frameworks and personality traits.
Taking my own practice as an example, the construction of a short-term trading system follows three underlying principles:
1. Volatility Capture Mechanism: Trigger trading signals through a 0.5% volatility sensitivity threshold.
2. Leverage Constraint Model: Maintain a dynamic balance with a 10x leverage ratio and 5% position.
3. Trading Psychological Anchoring: The cognitive loop of "holding is risk," avoiding the psychological loss of long-term holdings.
In response to the criticism that "short-term trading cannot capture large market movements," a new cognitive framework needs to be established:
1. Volatility Arbitrage Theory: A one-sided market is essentially a phase imbalance of volatility, which can capture trend initiation points through multi-cycle resonance.
2. Risk Budget Model: Control single trade losses within 0.5% of total capital, allowing 100 trades to accumulate a potential profit space of 50%.
The essence of a trading system is the quantum entanglement between the trader and market volatility. When the cognitive framework and personality traits resonate, any model can potentially yield unique excess returns. As revealed by the turtle trading rules: a successful trading system is not designed but chosen.
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.
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