1. Must set a stop-loss!
Remember one thing: the essence of any strategy is to combat the 'maximum potential loss', with the only difference being the presentation form of the stop-loss. Any strategy that does not set a hard stop-loss will inevitably have stricter additional conditions. For newcomers, the method to combat the maximum potential loss is clear: strict stop-loss. Players who cannot control the maximum potential loss are all amateurs and will eventually be eliminated.
2. Emotional Enemies
Humans all have emotions: greed, fear, hope, regret, which can lead to irrational decision-making and impulsive trading. The solution is to establish rules. Rules can replace impulse; if the rules are not met, do not act, and cold-bloodedly execute the system. The true trading experts I have seen all trade according to rules, and their trading behavior exhibits a strong sense of pattern.
3. Follow the trend, do not speculate.
“Do not speculate” is to avoid subjective guesses about the market's top or bottom, as this can easily lead to stubborn holding. Do not always guess the market direction, but follow the trend. Because: profits come from grasping the inertia of market movements, rather than the precision of personal reasoning. Realizing this can be considered the entry point. When personal views differ from the trend, decisively acknowledge the mistake and do not stubbornly resist.
4. All trading is essentially trial and error.
The core of trial and error is: if the logic is wrong, retreat immediately. Only when the market confirms that your view is correct can you hold on. If you buy at the bottom and it hits a new low, you must stop loss and exit, unless it keeps rising. For example, if you think it will rise, but it drops when you enter, you need to stop loss. Another example, if you think there is a real breakout, but it reverses after you enter, then you need to stop loss. Also, if you think it won’t hit the limit down and buy in, but it does, you should sell immediately... You need a logic to enter the market. When this logic is satisfied, you can hold; when the logic is not satisfied, retreat immediately. All trading patterns are essentially like this.
5. Compound interest.
Many people think that to make big money in trading, it must rely on a single bet. In fact, this is wrong. A single big bet does not come from extraordinary talent, but from being chosen by fate, needing the jealousy of luck to cooperate, and the control is not in your hands. In reality, making money in trading relies on compound interest. The essence of compound interest is the repeated capture of 'positive expected value opportunities.' When your trading skills mature, your system will have a 'most desired market condition.' To make big money, seizing a few such market conditions is the correct direction you can grasp.
6. Waiting and patience.
Trading requires patience, patiently waiting for worthwhile signals to act. However, the vast majority of people cannot control their hands. Some simply enjoy the thrill of opening and closing positions. Others feel bored after staring at the market for too long and want to fill the time with high-frequency operations. There are also those who have not formed their own trading rules. In reality, in the market, about 90% of candlesticks belong to unordered fluctuations. Frequent participation can lead to fees, slippage, and disorder, which will eat you up. Remember, in trading, patience is not a virtue, but a necessary rule for survival.
Well, the above six points are my musings. Finally, I give this to all newcomers: the essence of trading is to use controllable risks to seek probabilistic advantages, the rest is all noise.
