To maintain a good futures trading mentality, we must achieve two major rules:
Rule 1: Good fund management is the basis for maintaining a stable trading mentality.
Investors who hold a large number of positions are like pedestrians with heavy burdens on their shoulders. A small obstacle on the road is enough to make them fall. The root cause is that his position has become a burden to him, which is beyond his capacity.
So, why do investors do transactions beyond their ability?
It is because of his desire for interests that he cannot judge himself correctly and falls into the trap of interests.
Lured by the aura of profit, he can't see the trap of loss. Loss traps are generally in the dark, but profits are radiant. When an investor enters a large position, he will immediately find that there are traps full of losses everywhere. The good wishes before entering the market are instantly shattered by market fluctuations, and he will find that the market is far from as docile as he imagined. At this time, the desire for profit became his disaster, a large number of positions became a huge burden, and psychological problems caused by improper fund management began to be exposed.
How to manage funds well?
Three points should be noted:
1, the biggest catastrophic situation in the market.
When there is a catastrophic situation in the market, such as the market stops running, your loss is not enough to affect the ability of your capital account to continue trading, which is a special case.
In general, you can only do the transaction that you can bear, and your loss should be within your tolerance. Therefore, the scale of capital use can be calculated by your maximum stop loss, not by the expected profit.
3. The scale of your capital use should be combined with your trading ability. Those with strong trading ability can use a larger proportion of funds, otherwise they will feel that their profits are too small and their mentality is not good; Investors with poor trading ability had better be cautious, otherwise your losses will exceed your imagination and affordability, leaving your mind in a state of confusion.
Rule 2: Correct understanding of losses is the most critical.
Rejecting losses is the root cause of bad trading mentality!
Loss is a normal phenomenon in trading, and loss is inevitable. Profit and loss are like people's left and right feet, and successful profit is made up of profit and loss.
Profit and loss constitute a transaction, and no one can separate the combination of profit and loss. There is no transaction with only profit and loss in the market. The crux of the problem is that most investors regard losses as wrong transactions and think that they are wrong if they lose, so they constantly demand themselves to accurately analyze and predict the market, thus reducing the number of stop losses.
However, the market is simply unpredictable, and investors who treat losses as mistakes will never be able to get out of the fear of market uncertainty. The uncertainty of the market makes investors always in a state of trepidation, hesitant to enter and exit, and even more hesitant to stop loss. Even if the funds are well managed, they dare not effectively implement the trading plan for fear of making mistakes and thus losing trading opportunities.
Professionals know that as long as they focus on ensuring every link of the transaction (waiting, timing, buying, fund management, selling, etc. If you do it right, you will naturally make a profit.
Therefore, whether a trading strategy is correct should not be determined by the final result of a transaction, but by the final result of 10 transaction.
In fact, traders should remind themselves before each transaction that any success or failure is largely unimportant. This will psychologically help those who spend too much time worrying about the big final result of each transaction, which will lead to fear, lost opportunities and eventually lead to insanity.