Traders feel like a group of masters walking freely in the financial market. The market is like their cash machine, and making money is like taking something from their pocket.

In fact, these are the general public’s misunderstandings about traders. Traders are no different from people from all walks of life. They are just more professional in trading. Since trading directly deals with money, this will happen. This illusion.

However, a qualified trader does have a keen insight into risks. They first consider risks when making transactions, and then returns. By projecting professional thinking into life, traders will look at things significantly differently from ordinary people. They all have their own scales in their minds when evaluating the risks and benefits of something.

What is a trader’s thinking like?

In general, the most important thing is to control risks, followed by profit-loss ratio and winning rate, or risk-reward ratio and success rate.

First of all, they attach great importance to risks, but they do not avoid risks because they know that risks are everywhere and cannot be avoided. Instead, they strictly control risks. Once their risk control position is reached, they Stop loss will be carried out.

Then, it is to evaluate the risk-reward ratio and success rate of a transaction. This is divided into two modes: a high wind warning ratio and low success rate mode, and a low wind warning ratio and high success rate mode.

No matter which model is used, the parameters of risk-to-reward ratio and success rate must be coordinated within a reasonable range, and neither end should be too extreme to put the risk in an uncontrollable situation.

Just like angel investment, the success rate is low, but the risk-reward ratio is extremely high. For investing in start-up companies, the risk is high, but once successful, the benefits are extremely high; even if the investment fails, the ratio of a single investment to the total capital is low, and the risk is generally controllable. Therefore, although the single success rate of angel investment is not high, the risk-to-return ratio is extremely high, and the overall returns from multiple investments are still considerable, so it is sustainable.

What does this way of thinking of traders have to do with our daily lives? In fact, many times, we can apply it to life.

For example, I wanted to improve my writing skills last year, but writing was still quite difficult for me who had not written an article for twenty years and had always been obsessed with writing when I was a student. It can even be described as painful, that is, I feel like I have a lot to say in my stomach, but I just can’t write it out.

At this time, I just happened to come across a writing training course on the Internet that cost 200 yuan. As for online education, because there is a lot of water and the level is uneven, I have not been very confident. Although 200 yuan was not much, no one wanted to waste money in vain, so he hesitated for a while.

Then, I use the risk to reward ratio and success rate to evaluate. For the success rate, it is 50%, because whether the course is good or not can only be known after the training is completed; for the risk-reward ratio, the maximum risk is 200 yuan, and no matter how bad the return is, there will still be some gain. , but if the quality of the course is good, the rewards it will bring to me will be infinite. And out of trust in the quality of the articles on the teacher’s official account of this training course, I finally decided to participate in this training course.

In the end, it turned out that the rewards this course brought to me were indeed infinite. I felt extremely painful about writing and wrote dozens of articles in half a year. Although for many people, this is It’s nothing at all, but for me, it gives me a small sense of accomplishment. Now, I feel that participating in this writing training class is one of the best investments I have made in my life so far.

For the risk-reward ratio, it actually quantifies the ratio between the total investment and the total return. The total investment and the total return not only refer to money, but also time, energy and emotion. etc.

For example, when young people chase girls, many people do not dare to take the initiative to strike up a conversation or date out of shyness and timidity when they meet the girl they like. They often let the opportunity go to waste and regret it. However, if you think about it carefully, if you can be brave and actively strive for it, even if you fail, all you will lose is a little face and embarrassment; and if you succeed, the rewards may be infinite. For things like this, which are high-risk, we need to be more proactive in fighting for them.

However, for people with families, if they meet someone who makes them "heartbeat", if they take the initiative again, what they gain is only temporary happiness, but what they lose may be a happy and happy person. Families, for things like this with low risk-reward ratio, need to be highly cautious and self-disciplined.

And many small things in life can also be thought and made in this way of thinking.

For example, if you go to work in the morning and arrive at the company 20 minutes early, some people may want to go to the nearby supermarket to buy something. However, if they encounter a long queue at checkout, they will end up waiting in line. If you are late because of this, the cost will far exceed the reward. For things like this, where the risk-to-reward ratio is extremely low and the success rate is quite high, it’s best to do less.

Therefore, learning from the traders’ way of thinking is very helpful for us to make decisions when we encounter problems in life, or when we face difficult problems and make choices.

So what factors should we consider when evaluating a matter and making a decision?

The following is a summary of my own experience to share with you:

First, strategic issues need to be considered in combination with trends, timing, risk-reward ratio and success rate.

If the matter you encounter is strategic or a major choice, you should consider it more comprehensively.

1. Trend: refers to the future development trend of this matter? If the trend is something that is getting worse, even if it has been good in the last year or two, try to avoid participating in it. Try to choose a trend with large room for future development, continuous upward and better trends, and only by participating in the general trend of improvement, our profit expectations will become larger and larger, and it will be sustainable.

2. Timing: This means that if the trend of this matter is good, is now a good time to enter? Sometimes, even if it is a good trend, if the timing of participation is not chosen well, it will not only fail to bring good results, but may even bring terrible consequences; and if the timing is chosen well and participation in a good trend is good, We can have more flexibility and maximize revenue expectations.

3. Risk-to-reward ratio and success rate: What is the ratio of risk to reward? What is the success rate? The higher the number, the more worthwhile it is to participate.

For the risk-reward ratio, we must first consider the risk, consider the worst case scenario, and quantify the maximum loss value; and for returns, consider the minimum case first, and then consider the maximum Possibility scenarios, quantified return value. Of course, the higher the risk-to-reward ratio, the better.

If the success rate is extremely low, even if the risk-to-reward ratio is high, it is not worth participating. Such as buying lottery tickets.

If the success rate is high but the risk-reward ratio is extremely low, you cannot participate. For example, risking your life to do something with low returns.

Of course, what kind of value is considered high and what kind of value is considered low requires everyone to consider comprehensively based on their own circumstances.

Second, tactical issues only need to be considered in combination with the risk-reward ratio and success rate.

If the problem encountered is not very relevant, just consider the risk-reward ratio and success rate.

If you encounter something, the probability of success is very high, the investment is not much, but the return is very high, even if it fails, it will not hurt, then congratulations! Your character is outstanding, so don't hesitate, wait for no one when the time comes, and try to cut through the mess as quickly as possible. Of course, you must first make sure you think carefully to avoid blind spots.

On the contrary, if the investment you encounter is very high and the benefits are not very high if you succeed, then it is not worth doing; you must also avoid participating in something that seems to have a high success rate, but the success rate is not high. Failure can lead to huge disasters, such as bankruptcies.

Of course, everything cannot be considered in terms of risk-reward ratio. Many times we also need to have feelings when doing things; and the same is true for family ties, friendships, etc., these things do not need to be considered in combination with rewards. Paid.

Many times, giving without considering the rewards is very meaningful and will bring us incomparable happiness. I just hope that with the help of a trader's way of thinking, when you face certain problems and need to make decisions, you will have an additional reference method, and ultimately make better choices.