Stock trading is a form of cultivation.
1. Can you watch the market daily while being in cash for a week or a month, or even longer? This is the first hurdle, a very difficult one to overcome. Being in cash is also a form of operation, and it is high-level operation, but it is also the most difficult! Being in cash is absolutely the prerequisite for making big money; it is the best way to avoid market value declines, because only by being able to stay in cash can one keep a cool head! Never fear being in cash and miss good opportunities, as there is no end to making money in the stock market. Taking timely breaks is a sign of a calm mindset; those who cannot rest can be said to be unable to work.
Second, when all other stocks are rising, and yours is falling, do you feel disappointed? If you feel very disappointed, do you have the urge to change stocks? Conversely, when all other stocks are falling, and yours is rising, do you become arrogant and forget yourself? If you experience both, it indicates that your mindset is very restless, and you should overcome the second hurdle. Do not rejoice in rises, nor be sad in falls! Stocks rise and fall because the main force intervenes at different times; the initiation naturally rotates. Historical data tells us that during a major market trend, most stocks have similar increases (excluding a few super-performing stocks). Therefore, as long as you have patience, opportunities can be said to be equal.
Three, if a stock breaks an important support line, do you hold onto a lucky mentality? When the stock declines, do you expect a price rebound all the way down? If you have both feelings, you still have a long way to go, and this third hurdle is the largest and highest hurdle that the majority of retail investors cannot pass. Break the line (point) and exit! The main force will never let its stocks break casually, so a break must be met with a decisive exit at the first moment.
In the stock market, there are many pitfalls; having a bit of skill alone won't allow you to conquer the market. You must first conquer yourself, and overcoming oneself is not just about knowledge; it's more about having a calm and insightful mindset.
In fact, stock trading is also a form of cultivation; enduring loneliness is necessary to achieve success.
Basic principles followed in trading:
1. Always do the analysis work before trading.
2. Do not be arrogant. Whenever you are proud, you will give up risk control; the most outstanding traders are often the most humble.
3. Understand your weaknesses. Everyone has weaknesses, even the most outstanding traders.
4. Insist on independent thinking and do not go with the flow.
5. Avoid trading before opportunities arise; knowing when to stay away from the market is just as important as knowing when to enter the market.
6. Strategies should have sufficient flexibility to adapt to changes in the environment; the mistake most people make is to always stick to the same strategy. They will say: Damn, why does the market's fluctuations always differ from my expectations?
7. Once you make a profit, do not become too proud; the hardest thing in the world is to hold onto profits. This is because once you achieve the first goal, you will set a second goal to earn more money, and for most people, this will ultimately become an illusion.
Most people are not good at waiting for opportunities.
Because I do have some fear of the market, I find that the most successful traders are often those who are the most cautious about the market.
My caution towards the market compels me to seriously treat the market, sharpening my knife does not delay my work, mastering the timing of market entry very precisely.
Every time I trade, I always feel like a beginner swimmer holding onto the railing.
If I feel that the market conditions are off, I won't make a trade. My timing for trading is based on my experience and intuition because market changes will validate the usefulness of my knowledge and past experiences.
In many trades, I do not lose much because I am good at waiting for the right opportunities.
Most people are not good at waiting for opportunities; they rush into the forest while it is still dark, while I wait for the dawn.
Although the cheetah is the fastest animal in the world, capable of catching any animal on the grassland, it waits until it is completely sure before capturing its prey. It can hide in the bushes for a week, just waiting for that right moment. Moreover, it does not wait to catch just any young antelope, but a sick or limping one. Only when it is absolutely certain will it go for the catch.
For me, this is the epitome of a truly professional trading approach.
Whenever I patiently wait for the market to reach what I call the 'critical point' before taking action, I can always make a profit from trading. Why?
Because in this situation, I choose the psychological timing that marks the start of the trend. I never have to worry about losses; the reason is simple: I act decisively when the criteria signal, and I gradually accumulate positions based on the signals given. After that, all I need to do is wait patiently and let the market unfold its evolution process. I know that by doing so, the market will signal me at the right time to realize my profits. At any time, as long as I muster the courage and patiently wait for such signals, I can proceed step by step, without exception.
My experience consistently shows that if I do not enter the market soon after the trend starts, I will never gain significant profits from that trend. The reason may be that if I do not enter the market in a timely manner, I lose a large portion of profit reserves, and during the subsequent evolution of the trend until its end, this profit reserve is a reliable assurance of courage and patience, which is essential—throughout the evolution of the trend until its conclusion, the market will inevitably present various small retracements or rises, and this profit reserve is what allows me to remain unaffected and pass through smoothly.
Just as the market sends you positive entry signals at the right moment, it will also send you negative exit signals—if you have enough patience to wait. "Rome wasn't built in a day"; no market movement will happen overnight or within a week. It requires time to gradually complete the entire process of occurrence, development, and conclusion.
Profits can always take care of themselves, but losses will never automatically come to an end. Speculators must take stop-loss measures for initial small losses to ensure that they do not suffer huge losses. The only choice to ensure the continuation of speculative endeavors is to carefully guard their capital accounts, never allowing losses to reach a level that threatens future operations. As long as there are green mountains, one need not worry about firewood. On one hand, I believe that successful investors or speculators must always have sufficient reasons to enter the market to go long or short. On the other hand, I also believe that they must rely on some form of guidelines or principles to determine when to establish their initial positions.
Allow me to repeat, under certain conditions, the market movement is indeed in the process of unfolding. I firmly believe that anyone who possesses the instincts of a speculator and the patience of a speculator can find a way to establish certain guidelines to correctly judge when to establish initial positions. Successful speculation is definitely not mere guessing. To achieve systematic and consistent success, investors or speculators must master certain judgment criteria.
If you can unwaveringly follow reliable guidelines, then the tragedy of gaining and losing will no longer be doomed.
As we all know, market prices always go up and down, constantly moving. It has always been this way in the past, and it will continue to be so in the future. In my opinion, behind those major movements, there must be an unstoppable force. Understanding this is completely sufficient. If you refuse to let go of all the reasons behind price movements, being overly meticulous and curious will instead complicate things. Your thoughts may be obscured by trivial details, and that is the danger of such behavior. As long as you recognize that market movements have indeed occurred, and navigate your speculative boat along with the tide, you can benefit from it. Do not bargain with the market; most importantly, never dare to confront it.
You can't catch a clean fish in muddy water.
For risk management, I have always had my own set of methods, but this time, the unforeseen systematic flood broke my risk management dam. Suddenly, fundamental analysis and technical analysis lost all meaning, as the continuous selling pressure swept everything away, including my position in Applied Materials.
One of the most important lessons I've learned in trading is that you must adjust your trading style according to the different conditions of the market. I learned to adhere to trading discipline and act decisively, striking swiftly from the expansion of the internet bubble. When everyone is making profits, the market will turn, leaving bloody carnage behind. The stock market is like a slaughterhouse, where the fallen come from all walks of life, including famous hedge fund managers and ordinary investors. The overwhelming market sell-off waterfall drowns them all.
Every day is a psychological game. We each know how to attack each other's weaknesses and rarely miss such opportunities.
The two golden principles of capital management:
First, limit losses to small amounts, allowing profits to grow as much as possible, which is what we often refer to as a profit-loss ratio greater than 3/1.
Secondly, any loss should be limited to any position, meaning that no loss should exceed 1/20 of the total capital (the commonly accepted maximum ratio).
Stop-loss is the first rule of survival in the investment market proven by countless operations; stop-loss means survival.
Determining the size of stop-loss based on technical points will not only magnify losses to dangerous levels but also who can guarantee that technical points will have a higher success rate.
If your technical system frequently hits stop-loss, it indicates that your skills are not yet mature and are not suitable for the market's survival requirements.
The stock market is a market where randomness coexists with rules, and the regularity is very obvious, so simple that you might overlook it.
Simplicity does not mean ineffectiveness, and complexity does not guarantee effectiveness. I used complex analysis methods without success; ultimately, the successful analysis methods are the simplest tools and trading principles.
The ultimate solution to the stock market is not about how profound or complicated it is. In a nutshell, I send this message to everyone: analyze yourself, analyze the market, identify problems, and solve problems—that's all.
The successful trading process is a whole; 'stop-loss', 'long-term', 'going with the trend'—these unbreakable truths are merely parts of this whole.
The reasons for most retail investors' failures are clear: a lack of correct understanding of the market and themselves, along with a lack of complete and rigorous trading rules and strategies, are the fundamental reasons for most retail investors' inevitable failures.
I am not smarter than anyone else, nor do I have any so-called talent. I think the only difference between me and those around me is that I strictly adhere to trading rules that many people consider clichés, and that distinction is all.
In summary, the successful trading process is a whole; 'stop-loss', 'look long but trade short', 'go with the trend'—these unbreakable truths are merely parts of this whole. It can even be said that they are only the foundation built on correct trading techniques. Still, these conditions are merely necessary, not sufficient, for successful trading. Simply having strict stop-loss and capital management without a complete technique will only guarantee a slow bleed to death, which cannot lead to success. In this sense, the reasons for most retail investors' failures are very clear: a lack of correct understanding of the market and themselves, and a lack of complete and rigorous trading rules and strategies are the fundamental reasons for the inevitable failure of most retail investors.
Rules are still rules; transform all your understanding of market characteristics into objective rules (rather than analyzing and predicting) and strictly implement them. This can completely solve the problem of 'knowing is easy, doing is hard.'
Many friends, driven by the subconscious desire to 'find shortcuts', blindly follow this 'trend' and abandon the fundamental understanding of the market. In fact, if one cannot deeply understand the core issues that 'trading systems' or these emerging trading theories aim to solve, lacking a basic understanding of the market will undoubtedly lead to failure. This is why I place great importance on the foundational market concepts; anyone looking to bypass this step in search of the 'golden key' to success is unrealistic. Have you ever seen a master win based solely on the successful operational techniques of others? Every successful person undoubtedly created their own methods after deeply understanding the market, diligently and patiently experiencing the market and trading, feeling the pain of failure, and ultimately gaining a profound understanding of the market and themselves. Predecessors have provided enough technical methods to help us solve technical problems; there is no need for us to 'create' anything ourselves. As long as we rely on some simple techniques and strategies based on correct market concepts to form our own methods, that is enough.
Throughout the (investment) journey, I have found that the simpler and clearer the method, the better. So what advice do I have for everyone? Whenever you encounter confusion, return to the definition of the trend. If you understand technical analysis itself and feel confused, you should review what Dow Theory actually says. Everyone must go through a painful process to ultimately move towards success. Without experiencing this painful process, even if you make money, it does not mean you have found the right investment path. Moreover, ordinary people can also succeed in the investment market as long as they work hard.
I believe that trading should follow the trend; the better the trend, the more one should persist. I have yet to hear of anyone succeeding by going against the flow without relying on correct trading concepts.
When facing significant losses, be sure to stay calm and not act impulsively, betting blindly. Stopping quickly is the only choice. Take time to rest before considering entering the market again; otherwise, you will only fall deeper, become more trapped, and lose more severely.
What’s missed is eternal. Do not try to recoup lost money by increasing your stakes. Never hang yourself on one tree. Emotional fluctuations will also affect your judgment.
In all trades, I follow three 'most' principles:
Minimizing losses is the mindset that should be maintained when trading. The bottom line of trading is to protect your capital at the very least, and the goal of trading is to earn the maximum profit in the shortest time possible.
Many people, in order to gain some profits, will make erroneous operations. When the market hits the limit up and is certain to continue rising the next day, they will realize profits for the sake of immediate gains. They cannot bear the risk of stocks hitting limit up. I precisely enter when they all exit decisively. As long as you insist on going with the trend, there will be no mishaps. Others' withdrawals are your opportunities.
There are many possible outcomes, but when making a buying decision, you must ensure that it is a favorable time.
I don't believe that well-known trading strategies are not strategies. The premise of trading success is having the right method. With the right method, even with a half-understanding of the trading strategy, one can still make a fortune.
Extraordinary determination and perseverance are the keys to success and failure in trading. "Give them our successful trading methods as a foundation to nurture their own judgment, and form each person's unique trading style."
Luck is fundamentally insignificant for those who operate long-term. I have yet to hear of anyone who made a fortune solely based on luck.
From a statistical perspective, it seems that any successful single trade is due to good luck. Only with the right trading methods can one achieve a success rate of 53% across all trades. If you can maintain this record in the long term, you can achieve great success. Therefore, judging which of two traders is better cannot be done without a data analysis period of more than a year.
Record all aspects of the trading process, study the commonalities and individualities of trading, analyze gains and losses, and summarize the trading methods of each of my trades.
When things go awry, the most taboo mindset for traders is to adopt an ostrich mentality, hoping for a breakthrough that may never occur. Having this kind of lucky mentality in trading is nothing but self-deception and harms both oneself and others.
When the trading analysis system conflicts with your experience, wait; only wait. The only thing to do is to remain inactive until the conflict is resolved before taking action. Everyone engaged in trading, regardless of how experienced they are, must consider the changes that are least likely to occur in the market and be fully prepared. The so-called 'do your best and leave the rest to fate' means just that. In 20 years of trading, I do not know how many times I have encountered 'the most unlikely scenarios in the market'. Changes that have never occurred in the market do not mean they cannot happen in the future.
The conclusions history provides you may also lead you astray. A good trading system should allow you to grasp most of the market movements beyond history. The historical trajectory of market changes can indicate certain market conditions, suggest a rise in the trend, or indicate limited gains, but it does not mean that the trend will not rise again.
All trades should set stop-loss points, which is the last straw to ensure that one does not go bankrupt.
Go with the trend. Although this strategy sounds simple, it is indeed the core of trading strategies. You can use various methods for trading, as long as each method serves to go with the trend.
I am much quicker than others; once I sense a major trend, I act decisively. As for the timing of action, it depends on the market's reaction to news. If the market is rising when it should be, I enter as soon as possible; if the market goes against the analysis and falls instead of rising, then I patiently wait, observing the changes, and make decisions once the market trend becomes clear.
When facing defeat, reduce your trading volume. In a bear market, you must surrender your weapons, retreat urgently, and simply exit the market. Poor management will only worsen the situation and be beyond remedy.
Ordinary people only value fundamental analysis, while technical analysis is deemed insignificant. In fact, both are equally important.
People grow through failure and move forward from it. I have no intention of changing my trading strategy. If losses occur again, I will stop trading in advance to reduce losses. Someone once advised me: 'Since the market is not thriving, why not operate in the opposite direction to turn danger into safety?' I firmly stated: Absolutely no contrary operation. In the long run, doing so will only deepen the predicament and increase losses. Once trapped by the market, it is very difficult to turn things around.
I make every effort to keep my heart calm as still water. If guilt or restlessness could restore losses, or help with trading, I would be willing to cry out loud in public. But the reality is that personal emotions cannot influence trading decisions; traders without a calm mindset will achieve nothing.
As a trader, one must maintain a calm mindset. Remember, trading is just a part of life, not the whole. One cannot let temporary failures affect the bigger picture. Moreover, emotional fluctuations due to operational failures can negatively impact future trades and ultimately affect the overall situation. Therefore, I never let myself feel depressed about trading losses.
Even when making a lot of money easily, I still maintain a calm mindset. Successful trading makes me ecstatic, while trading losses can lead to greater despair. In my 15 years of trading, I have encountered numerous ups and downs. If I had not maintained this calm mindset, I would have gone insane.
The most taboo thing for traders is to miss a good opportunity, hesitating when they could make a big profit.
When conducting each trade, always prepare for the worst, minimize the scale of operations. Additionally, learn lessons from mistakes in a timely manner, pay attention to the direction of trading decisions, do not nitpick over daily market fluctuations, and it is also unwise to be overly concerned about the success or failure of each individual trade.
Follow Su Ge closely, analyze with precise strategies, use millions in AI big data to carefully select, to keep yourself in an invincible position? The market never lacks opportunities; the question is whether you can seize them. Only by following experienced and right people can we earn more!