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How to form your own trading system
Wanda futures Huang

Every investor in the investment market wants to find his own investment "holy grail". As the saying goes, "the army is unpredictable and the water is impermanent." Although investors have different ways to make profits in the market, a mature investor must have his own perfect trading system.

A complete trading system can be divided into three parts: technology (technical analysis), tactics (fund management) and psychological methods (psychological control ability). 1. technology: technical rules that meet the trading standards. That is, we often say that the standard of judging market signals. 2. Tactics: the tactical deployment of funds and the control discipline of buying and selling positions. A good fund management strategy is often the key to the success or failure of a transaction. Crowe clearly pointed out in "Futures Trading Strategy" that first-class strategy and tactics are the key to successful trading. 3. Psychological method: self-psychological control ability in the process of buying and selling positions. The most important thing in futures trading is self-control. Most loss-making transactions are caused by uncontrolled open positions. Cultivating mental skills is the only way for successful traders. Trading system is the rule of establishing, holding and closing positions.

Technical analysis can be divided into four schools: chart school, exponent school, number school and wave school. Chart school is simple and intuitive, which can reflect the psychological change process of traders and is a supplement to the research of behavioral finance. The indicator school makes full use of probability and statistics tools to apply the most likely historical data to the present, which is very simple to use. However, in the sideways market, digital indicators often have more error signals. The disadvantage of wave calibration is that there are too many possibilities. If the starting point of the same market is different, there are countless ways to count waves. Various technical analysis schools have their own strengths, and combining them to learn from each other is the key.

For the role of technical analysis, the author is more inclined to understand that "technical analysis is the code of conduct for our transactions". Technical analysis is to help us find trading signals in the market. When a stock or a futures variety shows a signal that conforms to our trading model, then we will execute the trading plan according to the capital strategy. We can classify and summarize various technical forms with special significance. For example, after the continuous rise of futures varieties, if there is a big negative line of "high-volume broken feet", then the probability of short-term adjustment is relatively large, and when this tradable "technical form" appears in the market, the probability of us entering the market to participate in short-selling profit is relatively large.

For the technical analysis and judgment of market signals, we should try our best to: 1, simple principle. Only by describing the market with simple, accurate and efficient behavior patterns can we not be confused by a large number of random factors on the surface. The simplest is often the best to use. 2. Optimize unnecessary signal conversion. Specious and dispensable transactions should be avoided as much as possible. In futures trading, there will often be a strange circle of doing more and making more mistakes, so as to remove some unnecessary trading signals and improve the profit success rate. 3. Grasping the regularity: A complete set of trading ideas and concepts summarized by traders themselves, including the accurate positioning of four complete circular trading signals: "Open positions long, close positions long, open positions short and close positions short".

In the process of investment, we constantly practice trading and gradually form our own set of models, which is our trading system. Although many things in this trading system cannot be quantified, their evaluation mechanism and formation mechanism are roughly the same. Investment is like meditation, I will go up and down for it.