Whether it is grid trading, Martingale strategy, trend trading, or swing trading, there are certain disciplines that must be followed. If these strategies are not adhered to, there is only one way: a dead end.
The first absolute discipline is to strictly enforce stop-loss.
When opening a position, set the maximum loss stop-loss level. When funds are limited, a 5% risk is recommended.
When you have a large amount of capital, it is recommended to risk around 2-3%.
For example, Martingale strategy + grid trading. Assuming you have 100,000 yuan, then you will operate with 5,000 yuan. If you use Martingale + grid according to strategy, you will either lightly add to positions or follow a 1:1.5:2 adding rule, or a 1:0.5:0.5 adding strategy. Therefore, your first position will be 500.
Continuously averaging down + grid trading, leading to profit, whereas losses mean losing this 5,000 yuan.
If it is trend trading, the same applies: if you open a position with 5% of your capital, and you have enough confidence, you can hold until you lose that 5%. If your confidence is low or the time does not go as expected, then you must also stop loss.
Therefore, the maximum loss ratio is core, is a safety belt, is an emergency brake. This must be strictly adhered to.
The second discipline is to reflect on a regular basis.
This can be done by taking out half of the funds after doubling, for example, if you have 100,000 yuan and profit 100,000 yuan, at this time, the principal is 200,000 yuan, take out 50,000 yuan in profit. At this time, you have 150,000 yuan, and then when you reach 300,000 yuan, take out a portion again.
The third discipline is to strictly execute according to the procedure.
The so-called mindset management issue is actually one where every point in the program design is not fully considered, such as how much profit, how much loss, and in what direction the trend is moving. You must be aware of these so that you do not experience significant emotional fluctuations.
Trading is an absolutely free profession, with basically no rules. Your only purpose for entering the market is to defeat the vast majority of players in this market to make a profit. Losers have no dignity; you must rise from where you fell, and the premise is that you must fully recognize your mistakes.
Increasing positions when in loss is not a mistake, especially if you are using grid + Martingale strategy. The key point is that if you turn your swing trading into a Martingale strategy, then that is a mistake.
For example, if you understand the trend as swing trading, then your initial position must be higher than that of the Martingale's initial position. At this time, if you incur losses and need to average down, if the additional position is not enough, then the Martingale may not be able to profit or break even. If the additional position is too large, you will lose your trading plan.
Holding onto losing positions is not a mistake. The mistake is that you have turned your swing trading into trend trading; for example, the levels that your swing trading can withstand are definitely different from the levels that trend trading can withstand, and you are entering the market in a swing trading manner.
Then your profit-loss ratio will not be very large. At this point, if you reach the swing trading stop-loss level and you do not stop loss, thinking the trend will reverse, and you insist on holding on, the more you hold, the deeper you go; one stop loss will lead to an exploded mentality.
Increasing positions in profit is also not a mistake; the mistake comes from one's greed. It should have been a swing trading position, adding to a trend position. Once it reverses, you will lose profits leading to a loss mentality exploding.
So what is the mistake? The mistake is not executing according to the trading plan in advance, the mistake is being whimsical, and the mistake is being unable to tolerate loss.
Although incorrect trading methods may lead to profit in the short term, in the long run, they will definitely lead to liquidation and losses.
From now on, let go of your obsessions, let go of your fantasies. No matter how much capital you have, even if you only have 100 or 200 yuan, as long as you can trade earnestly and execute your plan seriously, one day you will definitely succeed. Ten years is a dream; ten years sounds long, but in reality, it passes in a flash. Those still in the abyss, still in hell, from now on, execute your operations seriously, execute your plans. From now on, be disciplined, strictly execute, and your future self will definitely achieve true freedom, a freedom that is not only wealth-related but also spiritual.
We who are at the bottom have no great talent, no strong background, and not much capital to squander. If we do not awaken, we will never have a chance to turn things around. Imagine, ten years from now, we may be heavily in debt, our families broken apart, and our elderly parents suffering from serious illnesses while we cannot afford their treatment.
That day on the hospital roof, reflecting on my life, I realized I had always been aimless, always trapped in suffering. In trading, we have always lost. At this moment, we leap from the 18th floor, suddenly transported back to today ten years ago. At this moment, we painfully reflect, and I will use my willpower and resilience to carve out a path in the trading world.