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How to turn losses into profits
Losing money is a bad habit. Let’s take a look at several behaviors that lead to losing money in trading:
1. Frequent transactions
All K-line entities with kinetic energy and rapid fluctuations will make people have the urge to enter the market. And the smaller the time period, the faster the K-line fluctuates.
2. Heavy position trading
I am so confident in my trading choices that I will definitely get it right this time. So enter the market with a heavy position.
3. No stop loss
I don’t think the market will always go in the opposite direction to the entry direction. As long as there is no stop loss, it will rise back sooner or later. At worst, adding positions will lower the average price.
Traders with the above three trading performances are likely to lose money. Of course, this refers to the majority of ordinary people, and there are many trading geniuses who achieve their goals through frequent trading, heavy trading, and no stop loss. However, this approach is not suitable for most people. The reason why it is easy to develop the above three bad habits is because people think these three practices can make money. Subconsciously, I think that fast is better than slow, and big is better than small. Especially when it comes to money, wouldn't it be better to make quick profits and make more profits? Therefore, there is always a voice that makes people unable to help but frequently take out large positions without setting a stop loss.
1. Frequent transactions
All K-line entities with kinetic energy and rapid fluctuations will make people have the urge to enter the market. And the smaller the time period, the faster the K-line fluctuates.
2. Heavy position trading
I am so confident in my trading choices that I will definitely get it right this time. So enter the market with a heavy position.
3. No stop loss
I don’t think the market will always go in the opposite direction to the entry direction. As long as there is no stop loss, it will rise back sooner or later. At worst, adding positions will lower the average price.
Traders with the above three trading performances are likely to lose money. Of course, this refers to the majority of ordinary people, and there are many trading geniuses who achieve their goals through frequent trading, heavy trading, and no stop loss. However, this approach is not suitable for most people. The reason why it is easy to develop the above three bad habits is because people think these three practices can make money. Subconsciously, I think that fast is better than slow, and big is better than small. Especially when it comes to money, wouldn't it be better to make quick profits and make more profits? Therefore, there is always a voice that makes people unable to help but frequently take out large positions without setting a stop loss.
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To understand the trading cycle, these are the key points to remember
Cycle is a key part of trading cognition. It connects trading strategies and carries the law of price movement. It is the part that best reflects the depth of a trader's understanding of the market.
Whether rising or falling, price movements need to be attached to a certain cycle. For example, if there is a period of rise at the 15min level, it means that if the K line is set to 15min, you can observe that the price has a significant rise. But if the K line is set to 1h or 4h or higher, this period of rise will become insignificant compared with the surrounding K lines.
According to this idea, a more detailed market analysis of a smooth rise at the 4h level needs to be adjusted to a small level. Therefore, when you see this 4-hour rise at 15 minutes, it actually contains a lot of details. It may be a multi-segment rise + adjustment; if it is adjusted to a smaller level such as 1 minute, the market details of 240 K lines will be unfolded, and you can see a A magnificent bull market.
Whether rising or falling, price movements need to be attached to a certain cycle. For example, if there is a period of rise at the 15min level, it means that if the K line is set to 15min, you can observe that the price has a significant rise. But if the K line is set to 1h or 4h or higher, this period of rise will become insignificant compared with the surrounding K lines.
According to this idea, a more detailed market analysis of a smooth rise at the 4h level needs to be adjusted to a small level. Therefore, when you see this 4-hour rise at 15 minutes, it actually contains a lot of details. It may be a multi-segment rise + adjustment; if it is adjusted to a smaller level such as 1 minute, the market details of 240 K lines will be unfolded, and you can see a A magnificent bull market.
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Do you have these states in trading?
1. Can’t understand the market. It can be understood that there is no set of theories to analyze and describe the market, and the perception of the market price movement that has occurred is vague. There is no clue about the possible trends that will happen in the future. In short, I was confused when facing the market. I didn’t know what cycle to look at or what signals to look for. I could only watch the rise and fall of the K-line based on my feelings.
2. There are no clear rules for trading. I always struggle and hesitate whether to buy here. If you buy and get stuck, you will be depressed, if you make a profit, you will be happy, and you will be dominated by your emotions. But the logic of buying is unclear. Next time you encounter the same market situation, you are likely to make the opposite choice.
2. There are no clear rules for trading. I always struggle and hesitate whether to buy here. If you buy and get stuck, you will be depressed, if you make a profit, you will be happy, and you will be dominated by your emotions. But the logic of buying is unclear. Next time you encounter the same market situation, you are likely to make the opposite choice.
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How to keep transaction records scientifically?
Think back to the steps involved in the entire process of completing a transaction. Whether these steps can be recorded and quantified to facilitate retrospective analysis.
In other words, if you were asked to find a transaction from half a year ago and talk about the detailed logic of the entry and exit of that transaction, as well as what you finally learned and realized from it, would this be possible?
If not, it means that your transaction is missing an extremely important link - transaction review.
Why review? Review is to complete the reenactment of the event and look for improvement points from the thinking, behavior and final results at the time. Sometimes the word understanding is used to evaluate a person, saying that a person has a good understanding, can understand something quickly, and can learn quickly. In fact, if a person has high understanding, it can be said to a certain extent that he is good at learning from past actions, improving his thinking and guiding his next action. The external performance is what people call it, high understanding.
In other words, if you were asked to find a transaction from half a year ago and talk about the detailed logic of the entry and exit of that transaction, as well as what you finally learned and realized from it, would this be possible?
If not, it means that your transaction is missing an extremely important link - transaction review.
Why review? Review is to complete the reenactment of the event and look for improvement points from the thinking, behavior and final results at the time. Sometimes the word understanding is used to evaluate a person, saying that a person has a good understanding, can understand something quickly, and can learn quickly. In fact, if a person has high understanding, it can be said to a certain extent that he is good at learning from past actions, improving his thinking and guiding his next action. The external performance is what people call it, high understanding.
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What is trading based on feelings?
When entering the market, it is based on "I think this is going to rise or this is going to fall", rather than based on trading indicators or pattern breakthroughs.
Such trading actions are not consistent, executable, or repeatable. Descriptable reasons cannot be recorded in the review, and it is difficult to make the same entry choice the next time you encounter a similar environment.
This is one of the difficulties that most people need to break through. Even traders with a trading system will make this mistake.
#BTC #crypto2023 #ETH #Binance #Web3
When entering the market, it is based on "I think this is going to rise or this is going to fall", rather than based on trading indicators or pattern breakthroughs.
Such trading actions are not consistent, executable, or repeatable. Descriptable reasons cannot be recorded in the review, and it is difficult to make the same entry choice the next time you encounter a similar environment.
This is one of the difficulties that most people need to break through. Even traders with a trading system will make this mistake.
#BTC #crypto2023 #ETH #Binance #Web3
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Use RART to analyze market price movements, and the operation and adjustment are very clear. Currently in a new round of trading level adjustments. The new operational phase is the next focus.
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Why should you find a trading system that suits you?
Trading frequency, holding period, trading time, single risk capital, etc. are all factors that need to be considered.
To give the simplest example, when trading gold, is your goal mainly the daily trend market, the hour-level trend market, or the minute-level trend market?
The larger the level, the longer the holding period, the greater the retracement that needs to be tolerated, and the trading frequency is also very low.
Only by finding a trading system that makes you comfortable can you maximize the effectiveness of the trading system.
#BTC #crypto2023 #ETH #Binance #Web3
Trading frequency, holding period, trading time, single risk capital, etc. are all factors that need to be considered.
To give the simplest example, when trading gold, is your goal mainly the daily trend market, the hour-level trend market, or the minute-level trend market?
The larger the level, the longer the holding period, the greater the retracement that needs to be tolerated, and the trading frequency is also very low.
Only by finding a trading system that makes you comfortable can you maximize the effectiveness of the trading system.
#BTC #crypto2023 #ETH #Binance #Web3
See original
SOPs executed in transactions:
1. Determine the price movement stage (operation or adjustment) at a large level and determine the trading direction.
2. Waiting for trading opportunities at the trading level (indicator or pattern recognition)
3. Identify the trading value of trading opportunities and decide whether to enter the market
4. Determine the take-profit strategy
#BTC #crypto2023 #Binance
1. Determine the price movement stage (operation or adjustment) at a large level and determine the trading direction.
2. Waiting for trading opportunities at the trading level (indicator or pattern recognition)
3. Identify the trading value of trading opportunities and decide whether to enter the market
4. Determine the take-profit strategy
#BTC #crypto2023 #Binance
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Analyze the market more, watch the market more, and simplify and abstract complex trends. If you practice like this more, you will be able to understand the market and make adjustments.
The picture below shows a 5-day adjustment trend that Bitcoin has seen recently at the 15min level. The overall situation is a rectangular adjustment, which can be divided into 5 different forms of adjustment, and finally completes the breakthrough after price reversal.
Analysis is all hindsight. The key is how to make a trading plan when the price is in motion?
#BTC #crypto2023 #Binance
The picture below shows a 5-day adjustment trend that Bitcoin has seen recently at the 15min level. The overall situation is a rectangular adjustment, which can be divided into 5 different forms of adjustment, and finally completes the breakthrough after price reversal.
Analysis is all hindsight. The key is how to make a trading plan when the price is in motion?
#BTC #crypto2023 #Binance
See original
The position target determines the closing point and ultimately affects profits.
If you want to make big trend profits, you can't close your position too early, and you have to endure the twists and turns in the process or even take losses.
If you want to close your position as soon as possible and get the peace of mind, you can't regret why your position was closed early when the big trend came.
After all, greed is still at work.
#BTC #crypto2023 #Binance
If you want to make big trend profits, you can't close your position too early, and you have to endure the twists and turns in the process or even take losses.
If you want to close your position as soon as possible and get the peace of mind, you can't regret why your position was closed early when the big trend came.
After all, greed is still at work.
#BTC #crypto2023 #Binance
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Holding a position and not holding a position have different views on the market.
When the market direction is inconsistent with the position direction. Investors are likely to continue to adhere to wrong concepts, refuse to admit or even subconsciously ignore the fact that the market has turned, resulting in losses.
#BTC #crypto2023 #Binance
When the market direction is inconsistent with the position direction. Investors are likely to continue to adhere to wrong concepts, refuse to admit or even subconsciously ignore the fact that the market has turned, resulting in losses.
#BTC #crypto2023 #Binance
See original
Don’t predict the market
But this position is the dividing point between long and short
In the future, a new segment A will inevitably form upward or downward.
The key is how to seize the opportunity to enter the market in advance during this period of shock.
#BTC #crypto2023 #Binance
But this position is the dividing point between long and short
In the future, a new segment A will inevitably form upward or downward.
The key is how to seize the opportunity to enter the market in advance during this period of shock.
#BTC #crypto2023 #Binance
See original
How to build your own trading system?
Friends who are interested in "Probabilistic Trend Trading System" can contact me on Weibo and share with you a complete mind map of the theoretical framework of the trading system.
The fifth article "How to Build a Trading System" shows the backtesting of a short-term trading system within one month.
From the backtest performance, we can see that among the 14 profitable transactions, 10 had a profit-loss ratio <span If the stop loss space is appropriately reduced, the profit and loss ratio of the transaction should be improved, and it may have good performance in the long term.
So the stop loss conditions were modified.
Old condition: stop loss at the previous lowest point
The fifth article "How to Build a Trading System" shows the backtesting of a short-term trading system within one month.
From the backtest performance, we can see that among the 14 profitable transactions, 10 had a profit-loss ratio <span If the stop loss space is appropriately reduced, the profit and loss ratio of the transaction should be improved, and it may have good performance in the long term.
So the stop loss conditions were modified.
Old condition: stop loss at the previous lowest point
See original
How to build your own trading system?
(Friends who are interested in "Probabilistic Trend Trading System" can contact me on Weibo and share with you a complete mind map of the theoretical framework of the trading system.)
The previous four articles on how to build a trading system respectively explained
1. Trading system framework
2. Three key points in formulating the system and understanding of technology
3. Use a short-term strategy to look at the establishment of profit logic and the direction of thinking about subsequent issues.
4. How to conduct backtesting
This article still uses a short-term trading strategy to specifically explain how to backtest and optimize the trading system.
The previous four articles on how to build a trading system respectively explained
1. Trading system framework
2. Three key points in formulating the system and understanding of technology
3. Use a short-term strategy to look at the establishment of profit logic and the direction of thinking about subsequent issues.
4. How to conduct backtesting
This article still uses a short-term trading strategy to specifically explain how to backtest and optimize the trading system.
See original
How to build your own trading system? Part 4
This article introduces manual backtesting and does not involve quantitative backtesting. The accompanying picture captures the backtest performance of one of my medium and long-term trading strategies in the past three years, for reference only.
1. What is backtesting?
Simulate a complete set of trading strategies in a period of historical market conditions to obtain various parameters and capital curves of the trading strategy during this period. The data obtained from the backtest is the upper limit of the trading strategy performance after excluding the influence of mentality, execution ability, environment and other factors. If any other factors are added it will reduce the performance.
It can also be understood that only when the mentality, execution ability, and environment are all done well, can the performance of the trading strategy during backtesting be approached. Therefore, comparing the backtest return rate with the actual return rate can reflect the influence of factors such as mentality and execution ability from the side.
1. What is backtesting?
Simulate a complete set of trading strategies in a period of historical market conditions to obtain various parameters and capital curves of the trading strategy during this period. The data obtained from the backtest is the upper limit of the trading strategy performance after excluding the influence of mentality, execution ability, environment and other factors. If any other factors are added it will reduce the performance.
It can also be understood that only when the mentality, execution ability, and environment are all done well, can the performance of the trading strategy during backtesting be approached. Therefore, comparing the backtest return rate with the actual return rate can reflect the influence of factors such as mentality and execution ability from the side.
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Necessity and contingency in transactions
It is difficult to face the market rationally. The market is a carnival of emotions. Thinking that you will be a unique participant in the market is just a part of the flood. Please underestimate yourself in the market, feel the trend and follow the trend. Only in this way can you get a share of the market.
What traders strive for is profit, thinking that what they lack is technology. In fact, before one foot has been firmly established in the market, all kinds of emotions are rising. If you have a floating loss, you will stare at the market in the hope that it will rise again; if you have a floating profit, you will be worried about losing even a little bit of profit. So profits were cut off and losses were allowed to run.
What traders strive for is profit, thinking that what they lack is technology. In fact, before one foot has been firmly established in the market, all kinds of emotions are rising. If you have a floating loss, you will stare at the market in the hope that it will rise again; if you have a floating profit, you will be worried about losing even a little bit of profit. So profits were cut off and losses were allowed to run.
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How to build your own trading system? Part 3
As mentioned before, structural thinking is an advanced way of thinking. The process of building a trading system is to use structural thinking to consider the answers to trading problems.
Imagine that as a follower of various rules in your work life, have you ever found that the rules are unreasonable and need to be improved? Or have you ever created rules for your own team or organization?
The establishment of rules must be based on a set of reasonable logic and must be continuously practiced and improved on this basis. For example, improving the quality of lectures can help improve grades. Based on this, the teacher established a rule: no sleeping is allowed in class, and if you sleep, you will be punished by standing still. After long-term practice, the teacher found that if a student was too sleepy, he would not be able to listen to the class even if he was forced to stand, so he simply modified the rule to say that if the student was sleepy, he could ask him to go to the lounge to sleep for half an hour and then come back to listen to the class. The effect was better than being forced to stand. good.
Imagine that as a follower of various rules in your work life, have you ever found that the rules are unreasonable and need to be improved? Or have you ever created rules for your own team or organization?
The establishment of rules must be based on a set of reasonable logic and must be continuously practiced and improved on this basis. For example, improving the quality of lectures can help improve grades. Based on this, the teacher established a rule: no sleeping is allowed in class, and if you sleep, you will be punished by standing still. After long-term practice, the teacher found that if a student was too sleepy, he would not be able to listen to the class even if he was forced to stand, so he simply modified the rule to say that if the student was sleepy, he could ask him to go to the lounge to sleep for half an hour and then come back to listen to the class. The effect was better than being forced to stand. good.
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How to build your own trading system? Part 2
The previous article mentioned what aspects should be considered when defining the scope of a trading system from a top-level perspective. This article will talk about three key points that need to be grasped to build a trading system and how to grasp the technical aspects.
First, there are three key points that should be kept in mind when formulating a system:
1. Actions are clear and executable
Exiting the market, entering the market, adding positions, closing positions, taking profits, and stopping losses all need to be based on clear conditions, and these conditions can be judged repeatedly. It cannot be said that in the face of the same market situation, this time the judgment is to enter the market. Next time I will judge not to enter the market. Logical consistency must be ensured. In this way, we can get rid of the subjective influence on the transaction as much as possible.
First, there are three key points that should be kept in mind when formulating a system:
1. Actions are clear and executable
Exiting the market, entering the market, adding positions, closing positions, taking profits, and stopping losses all need to be based on clear conditions, and these conditions can be judged repeatedly. It cannot be said that in the face of the same market situation, this time the judgment is to enter the market. Next time I will judge not to enter the market. Logical consistency must be ensured. In this way, we can get rid of the subjective influence on the transaction as much as possible.
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How to build your own trading system?
Trading is a craft, an internal skill, and a skill. You will become more and more proficient as your trading experience increases.
From trading by feeling to becoming a systematic trader, everyone takes different time, some months, some years, or even longer. But in the end, the vast majority of those who can survive in the market and make stable profits for a long time are systematic traders.
The trading system clearly stipulates what operations traders should do under what circumstances and when and how much funds to use. This is what a complete trading system should do.
How to build a trading system?
From trading by feeling to becoming a systematic trader, everyone takes different time, some months, some years, or even longer. But in the end, the vast majority of those who can survive in the market and make stable profits for a long time are systematic traders.
The trading system clearly stipulates what operations traders should do under what circumstances and when and how much funds to use. This is what a complete trading system should do.
How to build a trading system?
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Why do you keep losing money in trading?
To make stable profits from trading, there are several necessary conditions:
1. Stable trading system
2. Stable trading mentality
3. Stable trading behavior
You can read another article "Conditions for Stable Profitable Trading", which has a description. To put it simply, to achieve stable profitability, we must achieve stability in the other three aspects.
But in fact, most people can't even keep their accounts from losing money, and even often liquidate their positions, let alone stable profits.
Why can’t I make money from trading? There are many reasons. I will list some misunderstandings that traders are prone to fall into in terms of trading cognition, and reflect on the concepts they should have. Thoughts affect behavior, and cognitive bias is the underlying cause.
1. Stable trading system
2. Stable trading mentality
3. Stable trading behavior
You can read another article "Conditions for Stable Profitable Trading", which has a description. To put it simply, to achieve stable profitability, we must achieve stability in the other three aspects.
But in fact, most people can't even keep their accounts from losing money, and even often liquidate their positions, let alone stable profits.
Why can’t I make money from trading? There are many reasons. I will list some misunderstandings that traders are prone to fall into in terms of trading cognition, and reflect on the concepts they should have. Thoughts affect behavior, and cognitive bias is the underlying cause.
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