The key to overcoming the psychological weakness of trading
Futures trading, even the whole financial market, any trading mode, whether it is stocks, futures or foreign exchange, is bound to be accompanied by losses. The reason why we can make a profit is because our last excellent systematic trading model can make a lot of profit to make up for these losses. Therefore, for futures trading, these single transactions show a certain randomness. You don't know whether a transaction is profitable or losing after it enters the market. Only after a large number of sample data statistics, such as hundreds of transactions, can we know that the final transaction result of an excellent system is profitable. So, we give ourselves a sense of security. This sense of security does not mean that we seek a winning trading system. This is a trading misunderstanding, which is impossible to realize. Instead, we have an early grasp or psychological expectation of an excellent system transaction result in the future. We know a certain trading model, and we will definitely make money, so that we can feel safe. This is actually the biggest difference between trading and gambling in our financial market. According to the statistics of the law of large numbers, gambling is a loss, but through the statistics of the law of large numbers and the system, the result brought by a good system is profitable. In other words, in gambling, casinos have the advantage of mathematical probability, while in trading, we have the advantage of mathematical probability.
Similarly, for greed and fear, we can also adopt a systematic trading model, give correct guidance and appropriate evasion. In fact, each of us has greedy thoughts, and we came to this financial market to make money. Then we can't and can't fundamentally kill our humanity, and we know a final result in the whole implementation process. When the system shows signs of entry and exit, it is necessary to integrate knowledge with practice and resolutely follow the signal in order to get an expected profit target. For example, you know that a system can make you earn about 40% in three months. Are we satisfied? If this can satisfy our greed, well, we will operate according to this system. If not, we will do it by modifying or even replacing our system. We will also improve profitability through a large number of data tests, but not by buying and selling at will.
We know how to channel our weaknesses in human nature and how to get the sense of security we want. There are two ways: the first way is to ask our predecessors and those who have been proved successful in the financial market. You can look at their statements and see at a glance whether this person can make a steady profit. The second method is to create a set of systematic trading ideas by ourselves, and then continue to practice and optimize, and finally achieve a stable and profitable state. This process takes a long time, and there is another way to speed it up. We let the computer do the calculations for us, and through the popular platforms, such as MT4 for foreign exchange, or "Wenhua" and "Pioneer" for futures, we will test a lot of historical data and make hundreds of statistics to tell us whether the trading system we created can be profitable. This method is faster, but learning financial programming language will waste some time.
If you want to make a profit in trading, you must strictly follow your own system signals to enter and exit. Otherwise, "nine Niu Yi hairs are a thousand miles away." Many times, you think you are smarter than the system, but as a result, you are smarter than the system. There may be a few deals that took advantage of you. For example, if you miss the entry point or exit point of a transaction, it is likely that the final result of the transaction will not be as good as the result of your strict compliance with the system.
At present, the popular automatic transaction should be automatic cash register. Computers increase our account funds through automatic transactions, but in reality, due to software debugging or data interface problems, data transmission is often too slow or simply disconnected. As you can imagine, I missed a deal because of the fault, maybe I just made less money; If a stop loss order is wrong enough, it may bring relatively large losses to the account. Therefore, under the condition that the technical platform is not perfect at present, I personally recommend semi-automatic trading, that is, the computer issues trading instructions, and we have our own trading operations. The biggest advantage of this is that it can guarantee the transaction and there will be no accidents that will cause our account to suffer great losses.
Insert: For trading activities, there are also negative effects that cannot be underestimated. These psychological factors, whether they are conducive to the progress of human society or not, all boil down to "psychological weakness that is not conducive to trading" here.