Whether it is grid trading, Martingale strategy, trend trading, or swing trading, there are several disciplines that must be followed. If these strategies are not adhered to, it will only lead to a dead end.
The first absolute discipline is to have strict stop-loss.
When opening a position, set the maximum loss stop-loss point. When capital is small, it is recommended to set it at 5%.
When the capital is large, it is recommended to set it at around 2-3%.
For example, Martingale strategy + grid. Suppose you have 100,000 capital, then you operate with 5,000 capital. If you use Martingale + grid according to the strategy, you are either lightly adding positions or following the 1:1.5:2 adding position rule, or the 1:0.5:0.5 adding position strategy. Then your first position size is 500.
Continuously adding positions + grid until you profit, while losses mean losing this 5,000 capital.
If it is a trend trade, the same applies. If you open a position with 5% of your capital, and you are confident, you can hold it until you lose that 5%. If you lack confidence or time does not go as expected, then you should also stop loss.
Therefore, the maximum loss ratio is core, it is a safety belt, it is an emergency brake. This must be strictly observed.
The second discipline is to implement at regular intervals.
This can be done by withdrawing half of the capital after doubling, for example, with 100,000 capital and a profit of 100,000. At this time, the capital is 200,000, and you withdraw 50,000 from the profit. At this point, you have 150,000, and then when you reach 300,000, withdraw a portion again.
The third discipline is to strictly follow the procedure.
The so-called mindset management issue is actually about not considering every point adequately during program design, such as how much profit, how much loss, and what direction the market is moving. You must be aware of these aspects to avoid significant emotional fluctuations.
Trading is an absolutely free profession, basically with no rules. Your only purpose in the market is to beat the vast majority of players in this market and make a profit. Losers have no dignity; you must get back up from where you fell. The premise is that you must fully recognize your mistakes.
Losses in adding positions are not wrong if you are using grid + Martingale. The key is that if you turn a swing trade into a Martingale strategy, then that is wrong.
For example, if your understanding of the market is swing trading, then your initial position ratio must be higher than that of Martingale. At this time, if you lose and then add positions, if the added position is not enough, then Martingale may not be profitable or may not recover the capital. If the added position is too large, it will also lose your trading plan.
Holding onto a position is not wrong. The mistake is when you turn a swing trade into a trend trade. For example, the levels that your swing trade can hold and the levels that a trend can hold are definitely different, and you entered the market in a swing trade manner.
Your risk-reward ratio will not be very large. At this time, if it reaches the stop-loss point of the swing and you do not stop loss, thinking the trend will reverse, then holding on will lead to deeper losses. A single stop loss can cause your mindset to explode.
Profiting by adding positions is not wrong; the mistake lies in one's greed. It should actually be a swing oscillation position, adding to a trend position. Once it reverses, you will lose profits and the loss mentality will explode.
So what was wrong? The mistake was not executing the trading plan beforehand, the mistake was being whimsical, and the mistake was being unable to tolerate losses.
Although a wrong trading method may lead to profits in the short term, in the long run, it will definitely lead to liquidation and losses.
From now on, let go of your obsessions and fantasies. No matter how much capital you have, no matter how small your starting point is, even if you only have 100 yuan or 200 yuan. As long as you can do trading seriously and execute your plan diligently, one day you will definitely succeed. Ten years is a dream; ten years sounds long, but in reality, it passes in the blink of an eye. Those still in the abyss, still in hell, from now on, execute your operations seriously, execute your plans, start self-discipline from now on, and strictly execute it. Your future self will definitely achieve true freedom, and that freedom is not only financial but also spiritual.
We, who are at the bottom, have no great talent, no deep background, and not much capital to squander. If we do not awaken again, we will never have a chance to turn our lives around. Imagine in ten years, we are heavily in debt, separated from our spouses, and our elderly parents are seriously ill, and we cannot afford the treatment.
That day on the rooftop of our hospital, reflecting on my life, I realized I had always been mediocre and deeply trapped in suffering. In trading, we have always been losing, and at that moment, we jumped from the 18th floor, suddenly traveling back to today ten years ago. At this moment, we painfully reflect and suddenly look back. I will use my willpower and resilience to carve out a way in the world of trading.