◆ Core Program ◆
Today's content can help everyone avoid at least ten years of detours on the trading path. Understanding the Dao means making a profit.
If you can understand the three core elements I will mention next, you can at least surpass over 99% of people in the market and join the ranks of winners.
As for where the upper limit is, it depends on your personal talent.
▌ Three Forces of System Construction
Everyone knows that to be profitable in trading, a complete trading system is needed. So what are the three core elements of establishing a trading system?
First win-loss ratio, second winning rate, third frequency.
Generally speaking, the relationship among these three belongs to the fish and bear's paw cannot be had both.
If you want to win, you have to sacrifice the win-loss ratio and frequency.
To achieve a win-loss ratio, you have to sacrifice the winning rate.
If you want both winning rate and win-loss ratio, you have to sacrifice frequency.
The essence of a successful trading system is to find a suitable balance among these three.
◆ First Dimension: Win-Loss Ratio ◆
The real reason for all losses is actually that profitable trades cannot be held, while unprofitable trades are stubbornly held.
So if you turn losses into small losses and big gains:
Assuming a winning rate of 20%, if you lose five trades in a row, one profitable trade can recover all losses.
Conversely, large losses and small gains mean that five profitable trades do not cover the loss of one trade.
◆ Second Dimension: Winning Rate Trap ◆
Is trading skill the key factor affecting the winning rate? It is not.
The main reason is the win-loss ratio setting:
Making 1 point profit/running a 100 point stop loss, historical data shows that random entry can achieve a winning rate of over 90%, but such a winning rate ultimately results in losses.
True trading wisdom lies in reconstructing the winning rate dimension with the win-loss ratio.
My winning rate may not even reach 10%, but my win-loss ratios are at least 10 times, 20 times, 30 times, and even over 50 times. Even if I have 20 consecutive losses, as long as I can earn one trade, I can basically break even.
◆ Third Dimension: Frequency Curse ◆
90% of traders lose because they can't control their hands:
Believing there are many quality opportunities and having too high a frequency of opening positions is due to the impulsive behavior of 'human nature's aversion to missing opportunities'.
The number of daily trades determines the survival rate of the account. Trading too much generally results in losses.
Top trader's core ability = strategic restraint (sniper-style lurking)
Actually, I am still in this stage of constant training. Although I am overall profitable, I often feel frustrated by missing opportunities, resulting in a somewhat high trading frequency and significant drawdowns.
Trading is a process of constant confrontation and balance with oneself. If you understand the essence of trading clearly, everything will become very simple.
■ Ultimate Profit Formula ■
10% Trading Skills
+40% Risk Control
+50% Mental Training
=100% Continuous Profitability
The amount of profit depends on a person's cultivation and vision, and has nothing to do with the principal. Real experts can accumulate large funds from small capital. In this account, I earned a maximum of 430,000 USD from 10,000 USD in 2 months, never going all in or holding losing positions, with an average position not exceeding 3%, using only 5x or 10x leverage. You can search for Jiang Shixiong on Coin to see my real trades or watch my historical posts.
✦ Trader's Covenant ✦
Wishing all friends who see this smooth trading.
Feel free to discuss any questions about trading at any time.