I'm not bragging, 95% of people don't know the core essence of trading.
95% of people don't know the core essence of trading, how many of these do you understand?
1. Uncertainty is the foundation of the market's existence; the future market trend cannot be accurately predicted.
2. Trends are chaotic, requiring traders to classify and define the chaotic trends, forming deterministic rules to respond to the uncertain trends.
3. What is a trend? Traders need to define their own trends and use this as a basis for opening positions and trial and error. A breakout is a trend, a pullback to a support level is a trend, a crossover of moving averages is a trend, hitting the top and bottom is a trend, chasing highs and selling lows is also a trend.
4. What is following the trend? Look at your trading account, if you made a profit, you are following the trend; if you lost, you are against the trend. It has nothing to do with the trend's chart patterns. In a bullish trend, if you make a long position but your losses keep increasing, can you say you are following the trend? If you are following the trend, why are you still losing?
5. How to open a position? Any method can work for opening a position; what it can determine is the trading rhythm and trial and error efficiency. It cannot decide whether you will make a profit or not. Flipping a coin can decide long or short and still make a profit; is your method worse than flipping a coin?
6. The opening win rate of any trading method does not create an advantage. After the law of large numbers takes effect, a one-to-one win-loss ratio's win rate will approach fifty percent indefinitely. A vast number of traders focus on opening positions for the long term, but the core of making a profit is not here.
7. What is the core of making a profit? It is to cut losses and let profits run, creating a high win-loss ratio; this is the only source of advantage.
8. The core purpose of position management is firstly to preserve capital and secondly to maximize profits when making money and minimize losses when losing.
9. What is trading technique? Trading technique starts from the moment of opening a position; it is how to handle risk and return, what to do when right and what to do when wrong, how to cut losses and how to let profits run reasonably. Various studies before opening a position are trading analysis, not trading technique.
10. Why do many people understand trading principles yet still fail at trading? Because knowing is far from enough; cognitive understanding must reach a top level. Who doesn't know that stop-loss is correct, yet there are still countless traders holding onto losing positions stubbornly.
