1. The Essence of Trading: Patience and Waiting
The market is like picking up money: The essence of trading is waiting for high-probability opportunities rather than frequent operations. Being in cash and waiting is an important skill; the delusion of capturing every market move will inevitably fail.
What to Wait For: Wait for opening signals that align with the trading system (such as technical patterns, liquidity resonance, support/resistance breaks), rather than subjectively predicting the market.
2. Core Elements of a Trading System
Three Elements (Choose Two):
Risk-Reward Ratio: The potential profit of each trade must significantly exceed the potential loss (at least 1:2).
Win Rate: Improve decision-making accuracy through technical analysis (such as candlestick patterns, EMA, FVG).
Frequency: Low-frequency high-certainty trading is better than high-frequency low-quality operations.
Contradictory Logic: You cannot have all three; choose a model based on your personality (such as 'high win rate + high frequency' or 'high risk-reward ratio + low frequency').
3. Risk Management: Survive to make money
Set position based on losses: A single loss should not exceed 1%-2% of total capital, protect the principal through position control.
Strict Stop Loss: A stop loss is the 'fuse' of trading, avoiding resistance and averaging down on floating losses.
Trailing Stop Loss: Gradually move the stop loss up after making a profit to protect profits while allowing gains to run.
4. Trend and Trend-Following Trading
Do not go against the trend: The trend is the direction of least resistance in the market; trading against the trend (such as trying to catch tops and bottoms) is a main cause of losses.
Trend Determination Tool:
EMA/Vegas Channel: Prices above the moving average indicate a bullish trend, while below indicates a bearish trend.
Liquidity Analysis: Institutions hunt for retail stop-loss orders through false breakouts; trend-following trades must avoid these traps.
5. Core Logic of Technical Analysis
Strike at Key Positions: Trade at resonant positions such as support/resistance, FVG (imbalance areas), and OB (order blocks).
Combine Large and Small Cycles: Use larger cycles to set direction (e.g., daily chart) and smaller cycles to find entry points (e.g., 1-hour chart).
Volume-Price Relationship: Price increases must be accompanied by increased trading volume; price changes without volume cannot be sustained.
6. Mindset and Cognition
Emotionless Trading:
Profit without greed, avoid luck in losses, execute according to the system rather than being driven by emotions.
Accept losses as trading costs, avoiding 'small gains and large losses'.
Focus on your own system: Opportunities always exist in the market, but maintain consistency and do not change strategies due to short-term fluctuations.
7. Institutional Behavior and Liquidity Logic
Liquidity Harvesting: Institutions trigger retail stop-loss orders through false breakouts and operate in the opposite direction after forming a trend.
Smart Money Laws:
Observe clearing data (retail concentration of stop-loss points) and use market sentiment in reverse.
Learn SMC, ICT, and understand the underlying operational logic of institutions.
8. Learning and Advancement Path
From Mindset to Technique: First read trading mindset books (such as 'Reminiscences of a Stock Operator' and 'The Random Walk Guide to Investing'), then learn technical analysis (such as price action, volume-price analysis, Wyckoff theory, SMC).
Review and Iterate: Record delivery orders daily, analyze reasons for success or failure, and gradually optimize the system.
Focus on One Skill: Mastering one strategy (such as the previously mentioned 2B false breakout true reversal strategy) is far better than dabbling in multiple strategies.
Trading is a game of cognition and discipline, with the core being 'cutting losses and letting profits run'.
There is no holy grail in the market; only through systematic thinking, strict risk control, and continuous learning can one survive and profit in the long run.