Stock Trading as a Personal Practice
Stock trading is unlike any other profession, where effort and reward often do not correlate. The level of hardship may not be bearable for most people, which is why the stock market is characterized by a pattern of seven losses, two breaks even, and one win. If you are a teacher, after many years you can have a wide influence, even if you do not hold a high position, you are respected. If you are a politician, the connections you accumulate over the years can provide you with the returns you deserve. If you are an engineer, the technical experience you accumulate over the years can make you an expert in a certain field. However, stock trading is completely different from these professions; it is purely a result-oriented endeavor. Even if you have been trading for five, ten, or twenty years, if you have not made money, then your experience is meaningless.
I. Stock trading is a difficult path, and before achieving financial freedom, one must overcome numerous challenges. It is almost impossible to make money easily.
1. It is difficult to gain family support for stock trading. Even in today's highly open-minded era, most people who do not trade stocks still look down upon it. How many retail traders are hiding it from their wives and parents? How many, after suffering huge losses, can only lick their wounds and pretend to be fine for fear of being discovered by their families? How many are wandering and confused after continuous inexplicable losses and want to give up? Currently, there is a serious misunderstanding of stock trading in Chinese society. For many people, stock trading is a way to avoid hard work, it is buying lottery tickets, or it is a disguised form of gambling. Under such a social environment, becoming a professional stock trader requires bearing a great psychological burden.
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2. Stock trading is "dependent on the weather for food." Some say that stock trading is like not opening for three years, and then eating for three years after opening, which is somewhat exaggerated but not unreasonable. In the 2018 market, how many people can avoid losses? How many can make money? Just like farmers planting crops, a good harvest requires the blessing of the heavens. Stock trading is the same; good returns require the cooperation of the overall market, that is, the overall economic environment, including domestic and international economies. If it is really not opening for three years, or even losing money, how many people can survive these three years?
3. There is no standardized profit model for stock trading. There is no universal standard formula for stock trading, but rather a variety of methods. In addition, there are various theories, schools of thought, and technical indicators in stock trading, as well as various stock trading secrets circulating in the market, which are even more diverse. For stock market novices with no foundation, finding the right direction to work hard is very difficult. Now, in the era of big data on the internet, there is a variety of information, and there are many false ones. The key is that stock trading is a very private matter, and it is easy to be fraudulent. If I say I made money from stock trading last year, others have no way to verify it.
4. Stock trading is against human nature. Most people think that stock trading is simple and comfortable, with one person, one desk, one computer, air conditioning, coffee, and a few keystrokes, and the money is in the bag. Only those who really make a living from trading know the truth. On the long road of the stock market, there are many temptations and traps. A bear trap by the market maker can easily kick many retail traders out. When we make a lot of money, we are excited and keep adding positions, but a deep correction, and the profits are all given up, and we are also trapped. When we are trapped, we are furious, and we fight to the death, but we are trapped deeper. In fact, these are all normal emotional ventings of humans, but as stock traders, they cannot, and must always maintain rationality, not happy with the rise, not sad with the fall.
5. There is always a need to make choices. Stock trading is more like a lone boat drifting on the vast sea, and no one will tell you where the other shore is. Retail traders are often in a state of confusion most of the time, buying and falling, selling and rising, being empty and missing, and being full and trapped. The market is filled with all kinds of news every day, and no one can give an accurate answer to how much these news affect the stock market.II. The stock market is also a relatively fair battlefield.
1. There are no personal relationships in the stock market. In modern society, many people are tired of the hypocrisy and personal interactions in their work. However, stock trading is different; one can completely remove the mask of pretense, close the door, and immerse oneself in the stock market, buying and selling according to their own plan.
2. There is no family background in the stock market. People with work experience and life experience deeply understand this point. In fact, the reason why many people first invest in the stock market is because of this. In their work, due to opportunities or family background, they encounter insurmountable bottlenecks and hope to take a chance in stock trading.
3. The stock market only has gains and losses. Many people may not agree with this point, believing that there are many underhanded practices in the stock market. Although this cannot be denied, ask yourself, which industry is not like this? After all, there are not many large funds that can manipulate the rise and fall of a stock at will, and apart from that, is there a difference between 100,000, one million, or ten million in the stock market?
In summary, stock trading is a very difficult path. If you want to achieve financial freedom, then work hard without saying anything, as the road is long and arduous. Fortunately, once you persist and succeed, all of this is worth it, and you will get the freedom you want.
I like quietness and enjoy walking quietly among the crowd, surrounded by ordinary passers-by, some very successful, and some with only a false appearance. I don't like to watch those disguised expressions and pretentious behavior. I prefer to persist in being quiet and alone. Investing is also like this.
I have been investing for more than 13 years, experiencing brilliant times and times of sorrow. Although my achievements cannot be called outstanding or astonishing, I no longer have to worry about making a living. I am grateful for investing, which has taught me not only to understand stocks but also to understand people. In the end, I understand that what investing has truly taught me is how to be a person.
Quiet investing is very important.
The stock market, or the capital market, is not like an ordinary competition; it is definitely a market where people are devoured without leaving a trace. Many people probably have the same feeling. Rationality is particularly precious in this market. Quietness allows you to always maintain a calm and rational observation, and handle problems calmly.Ask yourself, when investing, have you ever quietly read the financial statements of listed companies, have you ever carefully read several securities research reports, and have you collected news about the company's development? Ask yourself again, in your daily life, have you ever quietly done a few things you like, such as listening to the radio, learning photography by walking around the streets, or inviting a few friends to go fishing at the reservoir, or even quietly daydreaming alone. A quiet personality can make you calm in the face of changes and not panic in danger. This is particularly important in today's chaotic market.
People should be good at socializing, but thinking should be good at being alone.
The current internet has greatly narrowed the distance between people. Even if you are thousands of miles apart, you can know what your parents and friends are eating today, what good things they bought, and where they are going to play. This is the progress of human technology. The more people we contact, the more information we receive, and the convergence of people's thoughts can always create infinite sparks. Investing is also like this. The exchange of information between friends can often let you see some problems that you cannot find, and such communication can help you collect and learn more content in a short time.
Be enthusiastic with people, but think alone. As an investor, the most taboo thing is to follow the crowd. The fast internet may affect your initial judgment and completely subvert your will. Investors need to be alone, which is the loneliness of thought. Loneliness can cultivate the will to believe in yourself in your heart, and also give you a broader space for thinking. In the end, it will make you stronger.
In my opinion, those so-called big Vs who have time on the virtual network to argue with people until their faces are red are just too much time. The more they argue, the more it shows their lack of self-confidence.
In the stock market, it is not about how well you live, but how long you can live. I have seen too many people die in the dark before dawn. They are not without the ability to see the light, but they lack the ability to persist until dawn. The transformation of China's leveraged bull and bear market this year is worth your deep thinking. "The survivor is the king" is also this truth. Lonely thinking is very important.
Don't force the result, don't sleep restlessly.
Remember, investing is always a market behavior where a few people make money from the majority. Those who think they are a few people are often members of the majority. Perhaps in the short term, you are a few people, but what about ten years later, and what about twenty years later? Although I have been investing for so many years, I still can't guarantee that I won't lose all my money and only come out in my underwear on the day of "washing my hands in a golden basin."
The few people who make money are always a minority, and those who make money for a long time are even more outstanding. And the few people, their words and actions will inevitably be different from the majority. Their character or methods will inevitably be different from what you see. If you can't resist the temptation of the market, the noise of the news media, and the surging events and information, without enough patience and strong will, it is easy for you to get lost.There are two types of people in the stock market. One is for gambling, and the other is for investment. 99% of the so-called "investments" in the market are actually gambling, and there are very few people in the world who can invest like Mr. Warren Buffett, living in a small town. Since most people are playing games, it depends on who is smarter and who has a better mentality.
Over the years, whenever I made an investment expecting a 100% return in the short term, that stock often led to a loss, and I lost a lot of time value. However, the stocks that I didn't care much about and only wanted to make a 20% profit, in the end, could make money and bring unexpected surprises. In other words, those who can make money in the stock market are those who do not force the outcome and sleep well.
As I said at the beginning of the video, in the stock market, from understanding stocks to understanding people, and then from understanding people to learning how to be a person, what I have truly benefited from over the years is not how much money I have made in the stock market, but that I have learned to be an honest and not greedy person.
I have seen many people who have made a lot of money in the stock market, but their lives are not satisfactory. There are also many people who have been knocked down in the stock market and have been unable to get up, and their lives are no longer like a person. However, there are also people who are stable in the stock market and have endless fun in life.
Stock Market Trading Principles
1. The most important trading principle is "fund management"
If I am wrong, I must get out of it quickly. There is a saying: "As long as the green mountains are there, there will be firewood to burn." I must maintain my strength and make a comeback.
No matter when you suffer a setback, it will be very painful in your heart. Most traders, when they suffer a significant loss, always hope to make it back immediately, so they do more and more, wanting to make up for the loss in one fell swoop. However, once you do this, it is destined that you will fail. After I suffered that blow, I would immediately reduce the volume of operations. What I did at the time was not to make money to make up for the loss, but to regain my confidence in trading.
Anyone who engages in trading will go through a period of continuous profits, such as when I can make a profit for 12 consecutive days. However, I will definitely feel very tired in the end, so I will immediately reduce the volume of operations after continuous profits or significant profits. The reason for the loss is usually that after making a profit, they do not stop.2. The most important aspect of trading is "patience."
The main reason I kept losing money and ended up with nothing is the lack of patience, which led me to ignore trading principles and enter the market rashly before the overall trend became clear.
Today, there are fewer and fewer trading opportunities that meet the profit-making criteria, so you must patiently wait. Whenever the market trend is completely opposite to my prediction, I would say: I originally hoped to make a big profit from this wave of the market, but the market trend is not as expected, so I might as well withdraw.
You must hold on to the good cards in your hand and reduce the bad cards. If you can't hold on to the good cards, how can you make up for the losses caused by the bad cards? There are many quite good traders who ended up giving back all the money they made because they were unwilling to stop trading when they were losing money.
When I lose money, I will tell myself: You can't continue trading anymore, wait for a clearer market trend. And when you get good cards, you must be patient and hold on to them; otherwise, you will definitely not be able to make up for the money lost when you get bad cards.
The most common mistake made by many traders is that they trade too frequently. They do not carefully choose the right trading opportunities. When they see market fluctuations, they want to enter the market for trading, which is equivalent to forcing themselves to trade, rather than taking the initiative and patiently waiting for good trading opportunities.
The reason we can make a profit is that we have patiently done a lot of work before entering the market. Many people, once they make a profit, will take trading lightly, and their operations will become more frequent. The following several losses will make them unable to cope, leading to huge losses, and even losing their old capital.
3. The most important thing in trading is "risk control."
Every time I enter the market, I always set a stop-loss point in advance. This is the only way to let me sleep peacefully. I always avoid setting the stop-loss point at a price that the market trend can easily reach. If your analysis is correct, the market trend will never fall back to the stop-loss point. If the market reaches the stop-loss point, it means that this trade has made a mistake.My worst trade was born out of impulse. Based on my trading experience, the most destructive mistake in trading is excessive impulsiveness. Anyone who formulates a trade should do so according to established trading signals, and never hastily change their trading strategy due to a moment of impulse. Therefore, suppressing impulsiveness is the first element of risk control.
I want to emphasize that one must learn to control risks in trading, and you have to prepare for the worst. Therefore, you must operate in small quantities, keeping the loss of each trade between 1% and 2% of your capital.
4. The most important thing in trading is "calmness."
I have been engaged in trading for more than 20 years, and as a trader for over 10 years. If I hadn't learned to maintain calmness early on, I would have been driven crazy by the ups and downs of my trading career. Traders are like boxers; the market will always give you a hard blow, and you must remain calm. When you suffer losses, it means the situation is unfavorable to you. Don't rush, take it slow, you must minimize the losses and protect your capital as much as possible. When you suffer significant losses, your emotions will inevitably be greatly affected. You must reduce the scale of operations and consider the next trade after a period of time.
No matter whether I suffer a big loss or make a big profit, I will always maintain a calm mind. I insist on analyzing every trade every day to see if there are any violations. For good trades, think carefully about why they were successful. For bad trades, self-examine and find out the crux of the problem. Therefore, if you want to always do well, you must pay great attention to every trade of yours in ordinary times.
Almost everyone can list 80% of the trading rules we teach, but they cannot tell people how to adhere to these rules when the market is unstable. Therefore, calmly executing trading rules should allow you to grasp most of the market trends beyond history.
5. The most important thing in trading is to always "stay cautious."
Why can I achieve such a high rate of return? That's because I am afraid of the market's unpredictable changes. I find that successful traders are usually people who fear the market. The fear of market trading makes me have to choose the entry time carefully.
Most people will not wait until the market situation is clear before entering; they always enter the forest in the dark. As for me, I always wait until daylight to go in.
I will not predict the direction of market changes before the market moves, I always let the market changes tell me the direction of the market changes.Wait for and choose the "foolproof" opportunity to launch an attack; otherwise, I can only give up. This is my most important trading principle.
Do not let the joy of profit dazzle your mind. You should know that the most difficult thing in the world is how to continue making profits. Once you make money, you will want to continue to make more money. In this way, you will forget the risks. You will not doubt the correctness of your established trading principles. This is the reason leading to self-destruction. Therefore, you must always be cautious, be very cautious when losing money, and be even more cautious when making money.
Trading strategies should be flexible to respond to market changes, which can show your highly cautious way of fighting. The most common mistake made by most traders is that their trading strategies are always the same, and they often say, "Damn it, how is the market completely different from what I thought?" Why should it be the same? Isn't life always full of unknowns? When your important stop-loss point is broken by the market, it is highly likely that you have encountered a volatile market or a trend change. How can you continue this trend operation at this time? Therefore, you must be very cautious at this time, waiting for things to become more clear, rather than blindly continuing the operation.
6. The most important thing in trading is "self-discipline."
When I lost 70% of my funds at one time, I decided to learn self-discipline and fund management. When operating, I will try to relax my mood as much as possible. If the position I hold is unfavorable to me, I will exit; if it is favorable, I will hold on. My current mentality is how to reduce losses, not how to make more money. Therefore, when your trading situation is not good, reduce or stop trading; when trading enters a good state, increase trading. Never trade blindly when you cannot control it.
Every time I make a trade, I am always on pins and needles because I know that success in this industry comes quickly and goes quickly.
Every time I suffer a blow, it is always when I am complacent.
The speed of destruction of anything is far greater than the time it took to build it. Some things take ten years to build, but they can be completely destroyed in a day. Therefore, no matter when, I will strictly restrain myself.
My biggest weakness is being too optimistic. Therefore, I never think about how much money each trade can make for me when I operate now, but I always think about the potential losses, and always pay attention to protecting what I already have.7. The most important thing in trading is to be "willing to change oneself"; otherwise, you will never succeed.
I believe that trading and psychology are actually two sides of the same coin. The financial market is a good place to test personal psychological barriers. What happens to oneself is definitely a reflection of one's mentality.
It is difficult for a failed trader to turn over a new leaf and become a successful trader. Because they simply do not want to change themselves.
In the depths of every loser's heart, there is a subconscious desire to lose. Therefore, even if they achieve success, they will unconsciously destroy the fruits of victory. Everyone can get what they want in the market.
When trading, one should actively do well in oneself according to the flaws of human nature. For example, when I am not doing well in the operation, facing losses, I will continuously reduce the volume of business, and even stop operating, instead of increasing trading activities emotionally in the hope of saving the decline. Because in this way, it will definitely result in heavy losses, it is simply self-inflicted, and it is not to be survived.
The vast majority of people have a gambling mentality when trading, and they like to enter and exit with heavy positions.
Therefore, you must change yourself in this regard. Throughout history, no one who operates with heavy positions has not ended badly. You must control your losses within 5% for each trade. Of course, within 2% is the best. Trading according to the charts is like surfing. You don't need to know the reasons for the rise and fall of the waves. As long as you can feel the rhythm of the waves and grasp the timing of surfing, you can become a surfing master.
8. The most important thing in trading is to "follow the instructions of the trading system."
Some people change their trading system when they lose money, while others do not believe in the trading system at all, doubting the instructions issued by the trading system, so they often enter and exit the market according to their preferences. But I always follow the trading system.I engage in trading not for the thrill, but for the pursuit of victory. Such trading may be quite boring, but it is quite effective.
When I gather with other traders, they talk about their thrilling trading experiences, but I always remain silent, because for me, every trade is the same.
The first trading principle is to always follow the trend. Moreover, trust the trading system completely. No one is allowed to violate the instructions issued by the trading system without authorization. Because of this, there has never been a failed trade. In fact, trading is divided into four types: successful trades, failed trades, profitable trades, and losing trades. Losing trades are not necessarily failed trades; but trades that violate or do not follow the system's trading instructions are definitely failed trades.
The second trading principle is to control the risk to the lowest. The loss of each trade must be controlled around 1%. This is a very important thing. You must understand that the higher the risk of each trade, the more difficult it is to control the trading performance. As long as you can control the risk and follow the market trend, you will definitely make money. Usually, a trading system with a profit rate of 40% to 50% is good. But in a bad market, even if it fails continuously, the loss will not exceed 10% at most, which is the benefit of risk control.
Tai Mountain does not stand on good and evil, so it can achieve its height; the river and sea do not choose small help, so they can achieve their wealth. The stock market rises and falls, only after extensive learning and self-examination can one become a teacher.
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