As a trader, whether a novice or a seasoned professional, the volatility and uncertainty of the market present both challenges and opportunities. Here are some core insights distilled from practical experience and market wisdom:
1. Discipline is the lifeline
- Plan your trades, trade your plan: Clearly define entry points, stop-loss points, profit targets, and position sizes before entering a trade to avoid emotional decisions.
- Strict stop-loss: Control any single loss to 1%~2% of total capital; do not hold onto losing positions out of 'hope'. The market always has opportunities; surviving is key to winning.
2. Risk management > Technical analysis
- Position size determines mindset: Heavy positions can distort judgment, while lighter positions allow for greater calmness.
- Diversify risk: Avoid over-concentration in a single asset or direction; black swan events can wipe out all profits.
3. There is no 'holy grail' in the market
- Adapt rather than predict: Technical indicators and fundamental analysis are probabilistic tools; the market is always changing. Strategies like trend following, swing trading, and arbitrage each have their applicable scenarios; the key is to find methods that match your personality.
- Less is more: Overtrading is the root of losses; waiting for high-probability opportunities is more effective than frequent trading.
4. Emotions are the greatest enemy
- The cycle of fear and greed: Being eager to secure profits during winning trades and fantasizing about recouping losses during losing trades—this is a human weakness. Replace emotions with rules.
- Maintain emotional resilience: Stay focused amidst the noise of short-term fluctuations, avoiding distractions from social media or others' opinions.
5. Record and review
- Trading journal: Record the logic, emotions, and results of each trade, and regularly analyze the root causes of losses (such as lax discipline, overconfidence, etc.).
- Optimize the system: There is no perfect strategy, only systems that are continuously iterated. Adjust parameters or strategies promptly when market styles change.
6. The truth about capital curves
- Stable profits are more important than windfall profits: Be cautious of risks after consecutive profits and reflect rather than rush to recover after significant drawdowns.
- The power of compound interest: An annualized return of 20% already surpasses most institutions; pursuing unrealistic high returns often leads to collapse.
7. Levels of market understanding
- Beginner stage: Learn technical indicators and fundamental analysis.
- Advanced stage: Understand the psychology of market participants (such as group behavior behind support/resistance), capital flows, and cyclical patterns.
