In class, Xiao Yao threw this question to tian teacher. Tian didn't answer this question directly. Instead, I asked Xiaoyao, "Xiaoyao, what do you think a complete transaction process should look like?"
In class, Xiao Yao threw this question to tian teacher. Tian didn't answer this question directly. Instead, I asked Xiaoyao, "Xiaoyao, what do you think a complete transaction process should look like?"
Xiaoyao thought for a moment and immediately replied: "Try to open positions, open positions, add positions and close positions. Oh, yes, if the trial position fails, there is also a stop loss. "
Tian smiled and nodded and said, "You are right in a small part, but there is still the most important step."
"The most important part is missing? Impossible? " Xiao Yao thought.
"Wait! This is the most important step in the complete transaction process. " Tian said flatly.
"Wait? Is this a trading step? " Xiaoyao doesn't quite understand.
"yes! Wait! Waiting for the critical moment when the market path with the least resistance appears! "
Tian finally turned the topic back to Xiao Yao's question just now. He continued: "This part is a key part of Livermore's initial trading system. He completely introduced to us how a futures trader should complete the whole trading process. You know, no matter what kind of futures, its trajectory is nothing more than three kinds: upward trend, downward trend or shock. Livermore's operating system is only suitable for upward or downward trends, so what should we do when it is in a volatile market that occupies most of the trading time? Livermore also made it very clear in the article: wait! Waiting for the critical moment when the path with the least resistance is realized. Only when that critical moment appears, will the operations such as trial position, open position and level position occur. That's why I said, "Waiting is the most important link in the whole transaction process, understand? "
"Oh, I see. No wonder I always make mistakes when ordering. It turned out that I didn't wait until that critical moment and always wanted to trade, and I lost a lot. " Xiao Yao suddenly realized.
"That's right. Do more mistakes, do less mistakes, and do badly. For a futures trader, if you do less, you will make progress! " Tian said with emotion: "I lost in not doing less." Especially when you earn a lot of money in the market, you begin to believe that you are the master of the market, your confidence is extremely inflated, you begin to seize every opportunity in the market, and you lose the patience to wait. At this time, you are not far from bankruptcy! "
Xiaoyao carefully wrote down every word tian teacher said and told himself not to make the same mistake as the teacher. But as we all know, it is easier said than done. Many years later, when Xiao Yao himself experienced ups and downs, he really understood everything the teacher said at that time. I never knew it would be practiced, it's true!
Tian returned to this world and continued his lecture: "Of course, this kind of waiting is not passive waiting, but the key point of actively waiting for the transaction. As the saying goes, quiet as a virgin, moving as a rabbit. Once the K-line tells you that the minimum resistance of the market has changed, that is, the moment when the key point appears, you should not hesitate to try the position and seize the first trading point in the market. Last class talked about the next steps in detail, such as trial position, stop loss, plus position and so on. But I also want to emphasize one point here, that is, take profit. As the last link in the whole trading process, take profit is as important as stop loss. "
"Teacher, this is also the place where I have been confused. Livermore said don't lose part in the trend easily, but stick to it to the end. Later, he said, when the danger comes, avoid the risk first, and then consider coming back when the risk has passed. Is this a bit contradictory? So should I ignore the reverse fluctuation of the trend? Or should we stop making profits first? " Xiaoyao asked.
"This is a good question. This is also a bottleneck that many futures operators have been encountering. Maybe if I explain this problem to you, you will understand: Livermore's holding trend refers to strategy, while avoiding and coming back when encountering risks refers to tactics. "
Looking at Xiaoyao's blank face, Tian further explained: "Chairman Mao once had a famous saying: strategically despise the enemy and tactically attach importance to the enemy. The same applies to futures. When we do futures trading, of course, we are looking forward to the magnificent trend, and of course we hope to hold the correct position until the end of the trend. But anyone who has done futures should know that this is just a good wish of novices. Even if the trend market is smooth sailing, it will encounter a reverse callback, and often this callback will crush most trend investors, and the mistake made by these trend investors who did the right thing but lost a lot of money is to pay no attention to the enemy tactically. After we have gone through the processes of trial warehouse, warehouse opening and warehouse adding. Our cost of holding positions is rising. If you don't set take profit at this time and just hold it to the end, once you encounter a big reverse fluctuation in the market, you will be run out. Therefore, setting take profit is as important as setting stop loss! "
"Where is the right place to make a profit?" Xiao Yao continued.
"This varies from person to person. My personal habit is to set the take profit in the latest position. My logic is simple: if the market price falls below my last position, at least it means that the timing of my last position is wrong. Since I made a mistake, I will pay the price. The so-called price is to close all my positions and wait and see. I will never allow my income statement to become a loss statement. I have emphasized this point more than once. " Tian replied.
"Will you lose your original position and miss many big quotes?" Xiaoyao asked.
"Sometimes. But that's by no means because there is something wrong with my take profit, but because I have doubts about my own operation and haven't strictly followed the new ones. In fact, no matter how big the trend is, it will not happen overnight. You can think of it as several small trend markets plus several shock markets. You can understand that the reason for your profit is that the market has turned into a temporary shock. If the market continues to fluctuate, you have to wait. Once the market returns to the original trend track, you need to try again, open positions and add positions without hesitation, and repeat the previous operations. "
"This transaction is very tiring." Xiaoyao can't help but sigh.
"yes! If you want to be an excellent futures player, you must endure the hardships that ordinary people can't bear! This is what old people often say: if you want to stand out in front of others, you must suffer behind others! Think about it. Are you ready to eat bitter? " Tian asked seriously.
"I am ready! No matter how much I suffer, I will be a famous China futures master! " Xiaoyao said secretly.
(Note: This article is taken from Xiaoyao son Liu Qiang's "The Story of Futures Masterpiece-Novice in the Sea")