Trading Miscellany | Talking about the "One Wave"

In the financial market, trading methods can be divided according to market conditions, systems, profit patterns, etc.

Today we will learn about the profit pattern: one-wave profit, simply put, is a way to achieve rapid take-off through a wave of market conditions.

Another form corresponding to the one-wave flow form is transaction by transaction, which is the most commonly used way of trading. We will not discuss it here. The protagonist this time is: one-wave flow.

A wave flow, which belongs to the wave theory, is divided into two driving trends in the market: continuously setting new highs and continuously setting new lows. This one-sided trend is very easy to earn high spreads and is an excellent form of obtaining excess profits.

It is this violent form of excess profit that can achieve "get rich" in a short period of time and bring pleasure to traders. "Getting rich overnight" is no longer a dream.

Of course, it can make you rich overnight, but it can also make you explode instantly.

As a kind of extreme form that is not easy to predict and grasp, inexperienced investors can easily feel like hindsight.

Those mythical tycoons who were reported by the media as "getting rich overnight" are basically "survivors" in terms of probability.

There is a high degree of randomness in making a wave flow, and many times it is gambling on the market. Why do we say this? Let’s analyze the reasons below.

1. Very demanding on market conditions

If you want to make a wave, you must have a unilateral market, either a continuous rise or a continuous fall. Is it easy to grasp a unilateral market? It is definitely not easy!

If being easy cannot be called "the best", those big guys will no longer be legends.

Many times, this kind of market situation is hard to come by, because the pattern is difficult to predict. Traders need to keep trying and summarizing, not be discouraged, and at the same time do a good job of fund management to ensure that there is capital investment, and then finally catch it once.

Before that, a lot of time and opportunity costs are usually invested.

Moreover, the formation of a trend is not a matter of one or two days, but the change of the market may be a matter of one or two days. If you fail to catch it, you will waste time and energy, and may also bring the risk of liquidation;

If you catch it and don't operate it well, it will greatly affect your mentality.

2. It is a test of the trader’s mentality

There are not many unilateral trend markets in the market, and they are usually elusive. If you make a wave but the market does not show a unilateral pattern, it means you cannot escape; if the market shows a unilateral pattern and you make a large profit from it, it will make people sensitive and it will be painful to hold positions.

Suppose the market you are trading in happens to be a one-wave flow, and then you make a large profit that you have never had before. However, the profit is greatly affected by the market conditions. After the market is over, a correction is likely to occur, which means that the profit gained may be lost. Then, will you feel tormented in the process of holding a position, and want to keep an eye on the changes in the market all the time?

Another concept is involved here: wealth tolerance, which refers to the range of changes in wealth that a person can tolerate.

The size of your tolerance will directly affect the trader's mentality. If your wealth tolerance is 20%, you may feel nervous and anxious if the stock increases by 5%. If it increases by more than 20%, you will sell it immediately because the money you earn is beyond your tolerance. Often you will be carried away by the excessive wealth instead of operating it.

3. It’s addictive

Why is it addictive? Because a wave of operations can satisfy people's psychological needs for excitement and adventure, and allow people to obtain immediate feedback and rewards, but this is based on making money.

If you make money through a wave of operations, you may continue to do so next time, or even increase your investment. This poses huge risks. If you operate improperly once, it will lead to a substantial return of profits and cause huge losses.

Bad trading habits will eventually manifest themselves as systemic risks and end up like this.

In our daily work and life, many people like the "struggle spirit". However, trading is different from life. It is not that the harder you work or the heavier your position is, the better the return will be, but it is achieved through slow accumulation.

In general, a wave of operations is a bit like gambling, but trading is not the same as gambling. It should be executed by a system. The formation of a system requires time to accumulate experience and trading capabilities (such as information processing, trading skills, market analysis, etc.). It is very important to accumulate and then develop over time. The development of a normal career is a process of accumulation and then development. For most people, steady investment is the password to accumulate wealth.

You can't become fat in one bite, but you can learn a lesson.

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