What is it?
Do not enter a loss position, not even with one hand, absolutely not, absolutely not. Jesse Livermore, a generation of speculative masters, has repeatedly emphasized in his writings that it is inappropriate, even wrong, to enter a loss position. You should enter a loss position. Because once a loss has shown that something is wrong, if you enter a code operation again, then I will make a mistake.
Since the first position is profitable, it can be said that the price is moving in the direction in your favor, that your current operation is correct, at least for the time being. So you can start to enter according to the actual situation. And then, if the price moves unfavorably, you can also safely exit under the protection of the first position's profit. And if the price continues to move in your favor, then you can get a much larger profit.
Therefore, it is a wise move to increase the profit after the win. Of course, it is also worth considering whether the price movement will continue to move in the direction that is in your favor. If so, then you should be decisive to increase the profit.
For example, your maximum volatile stop loss is 2%; so you can also make a profit above 2% when you are multiplying. We first represent the maximum volatile stop loss with R. So I personally think it is more appropriate to multiply the profit in 1.5R-2R. Here I want to emphasize again that the core of profits that I said before is not profits but solidity.
Let's start with an example:
If the total capital is 50,000 yuan, we buy 1 hand at the price of 1,000 yuan, position 20%, stop loss is 2% or 980 yuan. R is 2%. If I add 15% to the price of 1.5 R, or 1030 yuan, or stop loss or R, or 2%, the corresponding price is 1,009 yuan.
If the second trade comes to a stop loss, the total profit and loss is 50,000.20%100.9% and 50,00015%1 0(-2%) = -600 yuan. This is still a fairly small range. After a certain profit, the risk appears to be quite small. If you are trading on the basis of 2R, it is very likely that you will not lose the total capital at the time of the second stop loss, and even make a profit.
If there is a good chance of profit, of course, you should not buy too little, but should hold enough positions. However, the increase in positions should not be a one-off, but should be gradually increased on the basis of profitability, and first of all consider the importance of risk control before competing for more money.
The stop loss at the chart position is often smaller than the stop loss at the first holding, usually around 14; since the trend is already clear at the time of the chart, a close stop should be used; that is, the stop loss should be reduced; R is between 0.5R-0.8R.
A close stop loss is a small stop loss in an attempt to capture a larger opportunity. However, doing so may require multiple operations to capture a larger opportunity.
Of course, it is also possible to combine the coding part and the previous holdings, while calculating the total position and cost. Generally, this can be done by protecting the cost of stopping the exit. That is, when the total capital begins to lose, the exit should be eliminated.
And finally, the question of the width of the encoding. The uniform encoding is not much of a problem, it's pretty much fine. And the pyramidal encoding needs some research, and I can tell you that I'm getting 20%-40% less encoding each time than the last time.
The most commonly used and most reasonable method of trading is the pyramid method; that is, fewer and fewer positions are bought later, after all, the price will never rise indefinitely. At the same time, after the price continues to rise, the risks faced also begin to increase. So, the pyramid method ensures that relatively more positions are established in low-risk situations, and relatively fewer positions are established in high-risk situations.
In addition to the pyramid card, there is also the uniform card, that is, the same number of purchases, although this method is not as good as the pyramid card, but it can also be used. Especially in the early stages of the market development, because in the early stages of the market you may not be sure whether you have confidence to win this deal, so you are in the market. The initial position is not large, so as the market unfolds, you feel you can continue to add, at this time the uniform card adding method will be a very good adding method.
Profits are always able to take care of themselves, and losses are never automatically closed. Well, this is the trading philosophy of a generation of trading masters, Jesse Livermore.
When our trades turn a profit, it means that the risk we face is reduced. And, once we have a profit, our holding confidence and patience is strengthened, and the position of holding a patient holding a winning profit is to obtain a rather important invisible operation in the considerable harvest. Although the invisible operation on the surface seems to mean no operation, it is very difficult to do it, because we often have anxiety, which is always able to think of a series of things that are not good for our position, or that will happen right away, which will shake our holding confidence, which leads to everyone closing the position too early.
The question of how to keep profits growing is ultimately a question of how to sell holdings. Only when the holdings are sold is a transaction completed.
Another problem that is involved in keeping profits growing is the problem of patiently holding a piece; because holding a piece between buying and selling is holding it still.
The real market does not go from start to finish in one day. The real market always takes a lot of work to complete its end stage. If you can hold a stable period of time, you can get a greater return in this round of the market.
It will become increasingly important to have patience with holding positions, which, although an intangible operation, is more difficult to operate than a tangible one. Jesseliv Ermore has repeatedly emphasized in his writings that it is not the repetition of operations that makes the money, but holding the position firmly. Of course, he asks you to hold the position of profit and not the position of loss.
I think the first problem to be solved is the problem of understanding. We have to recognize that only the medium-long line can make a lot of money. Only one trade makes a lot of money to pay for the next small loss. And multiple small losses are the price to be paid for seizing the opportunity for a bigger swing. Of course, as for how many times you grab a bigger swing, it's a question of how you enter and stop the loss.
The second point is to have your own way out or say the way out. This is the most important problem in our part. Once you have this specific way, then patiently holding a position means patiently waiting for the exit point to arrive. After having this exit method, you can deal with this volatile market. Otherwise, how do you hold the position?
After having your own comparison system exit method, is to write a trading plan every day. The purpose of writing a trading plan is to have more confidence and patience to wait for this exit opportunity. Because sometimes only write to be sure, otherwise things in the mind are often changed, one will feel that this can be leveled, and then you will feel that it can still be.
I don't know. As long as you don't randomly interfere with your trading or even your trading plan.
Below we turn the issue back to the discussion of exit methods. The general methods are leveraged withdrawal methods, trend exit methods and danger signal exit methods, etc.
Profit withdrawal exit method. This is when the profit falls back from the highest point to a certain proportion. Although this method is somewhat clumsy, it is a fairly operable exit method.
Now let's look at the specific use of this method. The profit retraction should be the corresponding maximum profit corresponding to the corresponding magnitude of retraction. Based on my personal experience and opinion, the data is as follows: (Profit is the ratio of profit per share to operating capital) Profits withdrawn More than 50% of 20% 20%-50% or 40%. 50%-100% or 30% 100% or more.
To give a few examples, for example, if my current maximum profit is 55%, then I can exit with a 33% profit withdrawal method. In other words, if my profit decreases by 1/3, I exit the position. If my profit is only 10%, then I can exit at close to cost.
I hope that you can master this method. In the face of such a noisy market, this method is a very economical one.
A point to emphasize here is that if you are confident in your holdings, you can increase the pullback margin a little; otherwise, you can reduce it a little. Secondly, if your holdings are relatively large, you can reduce the profit pullback margin a little, because there is already a certain risk in itself, at least the risk of your light position is large; otherwise, you can increase it a little. This can also be adjusted according to your own actions.
The danger signal exit rule, which is emphasized in Jesse Livermore's book, The Magic of Manipulation, is that the price of a commodity will fluctuate dramatically in the opposite direction on a given day, especially the tail. If traders often notice such danger signals and are able to avoid them in time, there should be considerable gains in the long run. Because once the danger signal appears, it indicates that a qualitative change may be taking place.
Trend-exit method. Exit operations can be performed when the current trend weakens, adjusts or even reverses.
The trend is weakening, for example, the original uptrend trajectory is still more obvious, but as the price rises, the price trajectory appears to decline or even flatten. That is, the uptrend line deviates downwards, I think this can be felt by everyone. Although there is no obvious pullback in profits at this time, but for technical reasons, it is possible to consider a downgrade operation.
Trend adjustment or reversal. The initial short-term uptrend ends and the short-term downtrend enters. However, the short-term downtrend runs more slowly and not to a great extent.
The specific practice is that the exit price of the profit withdrawal is first based on the highest price; then, according to the trend adjustment method, half of the exit is first; then, the price continues to return to the profit withdrawal exit price when the exit holds the other half, and finally completes all the exit operations.
Trend reversals are often accompanied by significant volatility and continuous declines, and if the price does not reach the price of the profit retracement point, then it should also be completely exited to effectively control the risk.
Any exit strategy can hardly sell at the highest point, cannot flatten at the lowest point, and in most cases may not even reach the halfway point of the market, but this is a successful operation.
When dealing with your excess income, be sure to do it yourself and don't delegate tasks to others.
The purpose of doing this is to give you a deep sense that you are making real money, not just numbers on the account. This will give you unparalleled confidence and pride. It will let you know that you can make money and succeed in this market.
However, more people are wolf ambitious, they define their profit goals in a high position, perhaps wanting to earn many times the amount of the bond in a year; when in fact they do not have the ability to do so, and the opportunity may not really come.
Translated from the Zen Library