What is the essence of trading?
The essence of trading is: cut losses when wrong, hold on when right, small losses big gains, and make significant profits and losses. Specifically for each core aspect: Follow the trend: find a simple moving average to divide long and short positions, only go long above it, and only go short below it.
Opening a position, testing position: go with the trend, follow the major trend against the minor trend, when entering the market, consider the potential for a sufficiently large risk-reward ratio; if entering at this level, if wrong, the loss is small, but if right, the profit is substantial, usually at the bottom of a trend or the early stage of a trend.
Opening a position, stop loss: if a key point is broken, one must stop loss ◇ do not take chances. If the price comes back, one can find another opportunity to enter. Do not have a gambling mentality ◇ thinking it might hold and come back, nor should one average down the losses.
Adding positions: add positions with floating profits, adding positions is the core of making big money; after the price rises as expected and then retraces, add positions at the support level where the retracement stops or at the previous high breakout, following the major trend against the minor trend.
After adding positions, there must be a stop loss point, moved to the new key point. The base position is already safe, leaving only the stop loss risk of the added position. If it fails, stop loss the added position, and wait for the next opportunity. If it continues to rise, hold the position firmly, continue to wait for a retracement to add positions, and keep moving the stop loss. Until the last movement triggers a stop loss or a head signal for taking profit appears.
Taking profit: Never easily take profit at any time; this is the key to making big money. Exiting can be done in batches or all at once, preferably all at once, as it allows oneself to wait for the highest probability head signal. If it is right-side trading, floating profits will definitely retrace, one must accept this mentally, do not think about selling at the highest point, or after not selling at the highest point feel that they have lost and must wait to sell at the highest point. As long as you can grasp and follow these principles in practice and maintain consistent discipline, you will find that making money is a natural occurrence.
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