Some people value K-line, some value time-sharing, and some value moving average or technical indicators as the core of trading. These are all manifestations of being caught in the details, and seeing the trees instead of the forest. Just as some people think that the United States is strong because it has an aircraft carrier, I don't know that India also has an aircraft carrier, but few people say that India is strong.
The reason why the United States is strong is that it has a complete and powerful system of rules, which has been improved through nearly a hundred years of development. For example, its perfect legal system and legal culture are the guarantee of efficiency, innovation and protection of intellectual property rights are the driving force of scientific and technological progress, the international monetary status of the US dollar can impose monetary tax on the whole world, and the most powerful army on earth is the basis for its hegemony to be implemented. The legal system is the skeleton, innovation is the muscle, the dollar is the fat, and the army is the fist. It can be said that America is the sexiest hooligan and bastard on earth.
Whether it is an aircraft carrier, a satellite, a missile or a supercomputer, it is not enough to become a core force for long-term success. Even if they are combined, they cannot become a solid and reliable force. Whether it is K-line, time-sharing chart, moving average or handicap language, it cannot be a magic weapon for long-term stable profit. Even if the two are combined, there is still no guarantee of long-term stable profit.
So what is a solid and reliable force? Rules and systems
Rules are the core of trading ideas and the makers of long-term advantages or disadvantages. They constantly output such things as "potential", that is, probability or possibility. In the futures market, most people make steady losses, because they use a set of rules with steady disadvantages, that is, the possibility of their losses is more than 50% steady; A small number of people, when the surplus and deficit are unstable, because sometimes they can stick to the rules that are beneficial to them, and sometimes they can't; Only a few people can make stable profits, because they have learned the rules and secrets of futures, established their own trading rules, strategies and even a complete trading system, and most importantly, they can stick to it.
Therefore, some people in the market use the daily K-line, weekly K-line or moving average to stabilize profits through long-term operation, while others only look at the comparative changes in the number of trading applications at the handicap, regardless of the K-line, moving average or technical indicators, and only rely on earning a short price difference (speculation) of a few seconds or a minute or two.
This is the performance of two extreme examples. There are other intraday band trading methods, five-minute momentum trading method, daytime short-term trading method, or long-term selection of a certain stage of band trading method. There are many people who use these methods, but only a few can make a steady profit. Through a lot of trading practice, these minority people finally understand that it is not the difference of trading time cycle that leads to their success or failure, but whether they choose the trading cycle that suits them and establish favorable rules for themselves. The most important thing is that when they insist on using these rules for a long time, they can make stable profits.
The fact is as simple as that.
Forgive me for being long-winded, and say a few more words. No method is perfect, and each method has its advantages and disadvantages. Those who pursue the perfect trading method will eventually be disappointed. Traders who make a steady profit know that they should stick to their own advantages and avoid their own disadvantages, that is, "stick to the rules with advantages." Only traders who understand this truth begin to embark on the road of stable profit.
To this end, there are at least three steps:
1. Study the advantages and disadvantages of this method and list it in detail.
2. According to each kind of advantages and disadvantages, formulate corresponding rules to foster strengths and avoid weaknesses.
3. Institutionalize and stick to it.
Take long-term trading as an example. Its advantages and disadvantages are listed as follows.
Advantages of long-term trading
1. Enjoy the advantage of compound interest growth, with considerable long-term benefits.
2. The amount of funds that can be carried is very large. Millions are easy, tens of millions are not a problem, and hundreds of millions can be solved with a little trouble.
3. The handling fee cost is low, which may only account for less than 1% of the profit.
4. The price requirements for entry and exit are not strict. The price change of several stalls and dozens of stalls is not a problem. The price difference of dozens of stalls is acceptable, even exceeding the expectation by hundreds of stalls, and you can still catch up.
5. Stop loss is generally controlled within 2%, and there are many operation opportunities, not limited to one or two days.
6. Take profit is similar to stop loss, and there are many operation opportunities.
7. The requirement for winning percentage is not high, 40% is quite good, 30% is acceptable, 20% is tolerable, and winning percentage has little influence.
Disadvantages of long-term trading
1. Only by grasping the general trend can we make money. Without the trend, you can't make money, so the trading opportunities are limited.
2. The main composition of profits may be only one or two key profits a year, so the opportunity of key profits can't be missed, and it can't be reversed. This requirement is very high.
3. The requirements for the position are extremely strict. If you use heavy positions rashly, there is a great possibility of heavy losses.
In the period of market fluctuation, it is a repeated test of psychology.
5. When you reach the stop loss position, you must stop the loss, otherwise you are likely to make a wrong trend, resulting in the loss of opportunities and funds.
6. Take profit cannot rely on imagination. Only when it is proved that the trend has been reversed can we go out, and we have to endure a considerable part of the loss of floating profits.
Well, it's not perfect, but there is a general framework. Now make rules for each advantage and disadvantage:
Rule 1: position control
Disadvantages 3, 4 and 5 show that improper position control will lead to serious losses and may miss the opportunity. Because position control is the core of long-term trading. In order to avoid serious loss of funds, the following rules are formulated:
1. Never use heavy positions, and the maximum position should be controlled within 20%.
2. If the stop loss line of 2% is reached, stop loss and leave under any circumstances.
3. When there is no trend or shock in the market, use less than 5% of the funds to test the market trend.
4. The funds are divided into four parts: trial warehouse, quasi-main warehouse, main warehouse and standby warehouse. Trial positions are used to test the strength of the market; The quasi-main warehouse is used to capture the first profit target when it is proved to be correct; The main warehouse earns the second profit target when the floating profit is full and the opportunity is good; Spare warehouses are generally not used.
Rule 2: homeopathic trading
From the advantages of 1, 2, 3, 4, 5, 6, 7 and the disadvantages of 1, 2, 6, we can see that only by grasping the trend can we make money, so Rule 2 should be a method of grasping the trend with high probability and a strategy of making full use of the trend. How? Formulate the following detailed rules:
1. Do not hold positions most of the time; Or light warehouse, the position is below 5%;
2. When 5% of the test positions have a floating profit of more than 2% or a loss of 2%, it means that the unilateral price movement has reached about 5%, which usually proves that the market may have a trend;
3. Only when there is a trend in the market and the potential income-risk ratio is above 3: 1, increase the position by about 5% to10%; Only when the floating profit reaches 50% of the position funds will we consider continuing to add positions;
4. Never speculate whether the market is the beginning or the end, only according to the technical signals proved by facts, and the entry and exit are based on objective signals;
5. The timing of entry and exit is mainly based on the classic price patterns of the long-term market, including the three most important patterns of "breakthrough, head or bottom, and technical deviation"; With multi-period * * * vibration as a supplement, if the daily, weekly and monthly lines vibrate * * *, the possibility is greatly increased.
What benefits will these two rules and nine rules bring?
1. Because there is no position opportunity, the principal does not bear any risks;
2. the iron law of stop loss 2. 2% guarantees 7 losses in a row, and the principal may still be about 87%. Once you do it right once, you can make a profit of more than 10%, which is enough to make up for two losses, and the profit is not much, which is the foundation of unbeaten.
3. When there is an opportunity, avoid the loss easily exceeding the stop loss line of 2% when making mistakes, and reduce the possibility of heavy losses;
4. By exploring the floating profit ratio and the classical price pattern, the reliability of grasping the trend can be guaranteed to reach more than 50%;
5. Add positions only when there is enough floating profit to ensure that the principal is not damaged and the profit can be expanded when it is profitable;
6. Entry and exit are not based on subjective speculation, which ensures the objectivity of the system and avoids false trends, and often there is no significant profit.
In addition, there are some additional advantages:
7. Because the position is light, the mentality is relatively relaxed, which is very beneficial to the health of traders.
8. There are few operations and the trading intensity is not great. There may be only a few transactions a year, and the number of instructions is dozens, so the work is relatively easy.
With these two rules and nine detailed rules, at least in terms of feeling, is the operational thinking clearer than before? Whether you can do it or not depends on yourself to try. You can test it on a real disk or a simulation platform. Subjective trading test, it is best to use the magic simulation software of futures, medium and long-term trading strategy, and you can verify the market for two or three years through your own firm operation within one hour.
The difference between a trader with rules and a trader without rules is just like the former driving a car and the latter riding a Spanish bull, which is the essential difference; As for whether the car is Audi or Alto, this is the next step. We will discuss it in detail when we have time.
These are just frameworks written in more than an hour, not trading systems, but only play a role in attracting jade. Colleagues interested in futures trading should be able to adapt it into any trading method rules according to their own needs.