In response to the requests of some customers, in view of the recent characteristics of intraday volatility of stock indexes and the resulting phenomenon of large-scale stock index futures intraday trend tracking trading system equity ratios retreating significantly, we now provide some personal information. trading thinking direction and coping strategies.

The issue of equity drawdown is a very common problem, and it is also a lingering demon that has plagued traders for a long time. If this problem is not fundamentally understood and solved, it will have a very negative impact on traders, and may even end their trading life prematurely. When facing an equity retracement, we must first make an accurate judgment. What is the specific reason for the retracement? I will not discuss subjective trading or left-side trading here, because the retracement rate of subjective trading or left-side trading is irreversible. The scope of the discussion is completely aimed at 100% right-side trading and programmed traders. Since it is trading on the right side, the reasons for the retracement are nothing more than three points: First, the volatility characteristics of the trading variety itself have undergone fundamental changes. Second, there are problems with the trading system itself. This may be due to some major flaws that were overlooked during the early testing and use of the trading system, or due to the poor use of optimization technology during the testing of the trading system. Third, the trading rules have undergone major changes. For intraday strategies, they mainly refer to handling rates and the price limit system.

The latter two problems are actually relatively easy to solve and easy to judge. If there are major changes in the trading rules, it is very obvious that they are not applicable to the current trading strategy. The solution is very simple, just give up and not do it. After all, diversification of trading is one direction, and it is impossible to rely only on a certain variety. or a certain strategy. If it is a problem with the trading system, it only means that you have not done your homework well. Start over, slowly review every step of the construction of the trading system, and then solve it in a targeted manner based on the problems encountered in the real market. I I believe there will be obvious results. The most difficult thing to solve is that the volatility characteristics of the trading product itself may change, because it is impossible to accurately predict and judge the changes in the volatility characteristics of the trading product regardless of time, amplitude, and operating mode

Yes, it is possible that this change in volatility characteristics will exceed the imagination of most traders, and it may end soon, or it may last for a long time

This is impossible for anyone to predict. I believe that the vast majority of traders may slowly leave, wait and see, or give up amid this torment of hesitation, struggle, and waiting. Seeing this, many people may be pessimistic or disappointed. In fact, they are not so pessimistic. I think this is precisely the charm of futures trading. Everything is uncertain. No one knows what will happen in the future. This is the only way to trade futures. The market can survive only when the old people leave and new people come again

There are three main directions to fundamentally solve the equity retracement of the trading system

First, trading system filtering Improvement of performance

I have always believed that in the long run, only low-frequency trading strategies can withstand the loss period of the system to the maximum extent, because the obvious trend market will always only be a small part of the market. Most of the running time is a period of repeated fluctuations and consolidation

When trading, you can only focus on the big and let go of the small, and it is impossible to capture all the market trends. Previous articles have compared the differences between high-frequency and low-frequency strategies. , you can take a look at it when you have time, so I won’t go into details here.

Second, the position management strategy of the trading system

Always think of the worst possibility. This is the most important principle for me in personal trading. Because I always think that the worst case scenario will happen at any time, so in terms of position setting, if you look at my real offer for a long time, you will find that the position setting is conservative. For example, you can open one hand of futures for 150,000, but I have to use 200,000 or even 250,000 per lot

Of course, conservative position setting will suffer losses when the market matches the system, but only conservative position management can resist the system's loss period to the maximum extent. In trading, I have always advocated

"Use how much money to do as much as you can" and "act according to your ability"

Under the same conditions, 100,000 can do the same thing as 1 million. But it will definitely not achieve the effect of 1 million. On the contrary, it will have a completely negative effect. We must remember that "you can do as much as you want with how much money you have."

Third, diversification of transactions

The concept of diversified trading has been mentioned many times in previous articles. To put it simply, trading cannot walk on one leg and cannot be limited to a single variety or trading strategy. This will have a negative impact on the long-term performance of the account. Healthy development is detrimental.

It is absolutely impossible for any single strategy or single product to achieve a low retracement rate in the long term. Traders who can make stable profits in trading are all multi-varieties and multi-strategy combinations

Reasonable diversified trading can make the trading account grow more stably and healthily.

If the east is not bright and the west is bright, there will always be strategies with outstanding performance. You can take a look at the 5 real trading accounts currently displayed. These 5 real trading accounts are actually a large multi-variety and multi-strategy combination

. The positions occupied by the futures index intraday accounts are very small. At present, When trading 2 lots, the main funds are concentrated in multi-variety trading accounts. The multi-variety accounts have performed very well in the recent period, which to a certain extent has alleviated the pressure of the intra-day account loss period.

Of course, it is impossible for everyone to have the conditions to trade multiple varieties at the same time. In specific transactions, everyone needs to set positions according to their own different financial conditions

The above content is limited to transactions on the right side. Suitable for left-hand transactions.

Xiaoqiang