Three Trading Thinking Models Used by Experts That You Should Keep!

In terms of trading techniques, everyone has learned pretty much the same thing. Whether it's K-lines, moving averages, patterns, or indicators, the qualitative content is all there; it's just a matter of how much you learn. As long as you study diligently, the difference won't be significant.

But why can some people profit consistently while others repeatedly lose?

I used to think it was luck, but after being beaten by the market for many years, I gradually understood that what truly makes the difference is 'the way of thinking.'

An excellent trader does not necessarily know all the techniques, but they definitely have a mature trading thinking model.

Today, I will share three thinking models that I have seen many experts use. Many people find them simple, but very few can truly understand and effectively apply them.

Model One: Probability Thinking - Trading is not about right or wrong, but about probability.

The biggest misconception for many people in trading is treating every trade as a 'right or wrong question': if it goes up, it's right; if it goes down, it's wrong. Once they hit a stop loss, they start doubting the system, and once they take a profit, they feel they are exceptionally gifted.

But real experts never look at trading this way because they consider: over the long term, if I use this logic for 100 trades, can I profit?

This is 'probability thinking.'

They do not need to profit every time; they allow for losses, even habitually accepting losses. As long as the risk-reward ratio is high and the win rate is controllable, losing 7 out of 10 times is acceptable.

Many beginners learn techniques just to 'get it right every time,' but experts use statistics, not metaphysics.

To put it bluntly: experts do not predict the future; they are playing a long-term advantageous game.

You are not a god, and the market will not rise just because you are bullish. You are simply making a choice with a positive expected value and seeing if long-term execution can realize its value.

This is the core of the first model - do not pursue correctness, but rather whether it is worth doing.

Model Two: Marginal Thinking - It's not about whether the current situation is right or wrong, but whether it's worth continuing.

After trading for a long time, you will find that merely 'seeing the right direction' is not enough; what truly determines whether you can catch a wave of market movement is your sensitivity to 'marginal changes.'

Take futures, for example; recently, rebar has gone through a small wave of increase, with moving averages in a bullish arrangement, MACD golden cross, and consecutive bullish K-lines, all looking very strong. Many people will chase long positions at this time. But if you look closely, you will find that in this wave of upward movement, the body of each bullish line is getting smaller, trading volume is shrinking, and the price is getting closer to the upper band, yet it fails to break through.

These technical details are telling us one thing: momentum is weakening, and margins are deteriorating.

You may not immediately short, but at least you should understand that the 'cost-effectiveness' of this wave of market movement is becoming lower and lower. Experts do not feel secure holding a position just because the price is still rising; they focus on whether the quality of this rise can be maintained.

For example, in forex trading, we see an upward trend in euro against the dollar on the daily chart, with K-line stepping up, which looks very healthy. However, when you switch the chart to 4-hour or 1-hour, you will see that the follow-through strength after each breakout high is weakening, the RSI indicator shows a top divergence, and the Bollinger Bands start to contract.

These phenomena in technical analysis can all be summarized as 'marginal decay.'

In other words, although the price has not peaked yet, the efficiency, momentum, and space of the rise are all deteriorating. If you continue to hold long positions at this time, the cost-effectiveness will keep decreasing. If you're an expert, you would choose to reduce your position in batches or start watching for reversal signals.

The essence of marginal thinking is the perception of 'internal quality changes' in the market.

It’s not just about the surface rise being strong; it’s about whether the rise has strength, continuity, whether it’s 'accelerating' or 'weakening.'

Technically, there are many ways to capture marginal changes, such as:

(1) Volume coordination: Is the rise on low volume or the drop on high volume?

(2) Momentum indicators: MACD bars are getting shorter, RSI divergence.

(3) Structural details: High points are rising, but low points are not following, bullish lines are shortening, and false breakouts are frequent.

(4) Rhythm changes: After the wave rises, it begins to consolidate sideways, even frequently testing the upper edge without success.

These things are no longer simply about 'seeing correctly,' but rather about 'whether it's worth continuing.' Therefore, what we need to do is not predict the top, but to detect changes in momentum, manage risks in advance, or withdraw from opportunities that are becoming increasingly less cost-effective.

Model Three: Antifragile Thinking - It’s not about avoiding risks but leveraging volatility.

Most people in trading think about avoiding risks because no one likes to incur losses; losses mean losing, and it's best not to lose, not to draw down, and definitely not to face a margin call.

But the thinking of experts is the opposite; they do not avoid volatility, but rather utilize it.

I remember vividly, over a decade ago, chatting about trading with a friend in futures. He said that his most comfortable state is not when the market is stable, but during severe fluctuations.

I asked him why. He said that when he designed his strategy, he preset these drastic and uncertain fluctuations. This surprised me at the time and even enlightened me.

Because I never knew that you could preset your risk, no longer pursue perfection, but pursue a goal: even if I am wrong, I won't die; if I'm right, there's room to profit. This way, your trading system will have a strong ability to withstand shocks, and you won't be afraid of risks anymore.

The market changes too quickly; you can never get it right every time. Today it’s a trend, and tomorrow it might turn into a consolidation. This week the US dollar index is one-sided, and next week it could fluctuate back and forth. If you need to rely on 'guessing right' to make money every time, then we will never be able to go far.

This is 'antifragile thinking.'

In simple terms, the core of antifragility is not avoiding market volatility but embracing it, even using it.

For instance, in the futures market, many people fear volatility after placing orders; they are afraid of being washed out, afraid of being stopped out, afraid of fluctuations. But experts are not afraid; they design their systems to 'only capture the highly certain segments,' filtering out the rest.

How to do it? First, use light positions and never let one trade determine your life or death. Secondly, have clear stop-loss points; if you make a mistake, exit without hesitation. Furthermore, let profits run; losses are limited, while gains can multiply.

Looking back at many major waves, often the moment of initiation is marked by severe volatility. Many people miss out because they are afraid of being shaken out. But the antifragile system of experts allows them to make small trades in severe fluctuations, making small entries. Once the direction is established, they add positions in the trend. This is not reckless; the structure allows it, the system supports it, and the risk-reward ratio enables them to do so.

They are not 'precise', but rather 'can withstand, run away, and digest.'

Finally, I want to say a few words.

You can spend many years honing your skills, but in the end, you will find that what determines how long you can last is how you 'perceive trading' itself.

Experts are not necessarily smarter; they have long since escaped the mindset of 'trying to profit every time.' They do not rely on guessing the market to profit but rather use their model-based thinking to earn steadily and compound.

Therefore, instead of changing strategies every day and chasing trends, we should calm down and understand these few models. They may not make you rich overnight, but they can help you go far and live long.

And these are the underlying logics that truly allow us to make a living through trading.