I'm not exaggerating, 95% of people do not know the core essence of trading.
95% of people do not know the core essence of trading. How many of the following do you understand? 1. Uncertainty is the foundation of the market's existence; future market trends cannot be precisely predicted.
2. Trends are chaotic, and traders need to categorize and define the chaotic trends, forming deterministic rules to deal with the uncertain trends.
3. What is a trend? Traders need to define their own trends, which serve as a basis for opening positions and trial and error; breaking through is a trend, pulling back to support is a trend, the crossing of two moving averages is a trend, hitting the top and bottom is a trend, chasing highs and cutting losses is also a trend.
4. What is following the trend? Look at your trading account; if you are making money, you are following the trend, and if you are losing money, you are going against the trend. It has nothing to do with the shape of the trend; in a bullish trend, if you go long but your losses keep increasing, can you say you are following the trend? If you are following the trend, why are you still losing money?
5. How to open a position? You can open a position in any way; what opening a position can determine is the trading rhythm and trial-and-error efficiency, not whether you can make a profit. Flipping a coin to decide long or short can also make a profit. Is your method worse than flipping a coin?
6. No trading method's opening success rate can create an advantage; the win rate will approach fifty percent after the law of large numbers takes effect with a one-to-one profit-loss ratio. Many traders focus long-term on opening positions, but the core of making money is not here.
7. What is the core of making money? It is the closing logic of cutting losses and letting profits run to achieve a high profit-loss ratio; this is the only source of advantage.
8. The core purpose of position management is to protect the principal and to earn more when making money and to lose less when losing money.
9. What is trading technology? Trading technology starts from the moment of opening a position; it is about how to handle risks and returns, 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 technology.
10. Is there huge profit in trading? Profit and loss originate from the same source; bear risks to gain returns. Huge profits come at the cost of huge losses. What is important is what kind of huge profit you want to earn and what kind of price you are willing to pay for it.
