The highest state of a trader is patience!
In an article I shared earlier, I once mentioned that there are only three best trading opportunities:
1. A sustained upward trend. In an upward trend, patiently holding long positions only requires attention to when signs of a downward reversal appear.
2. The upward breakthrough at the end of a horizontal fluctuation range.
3. The bottom reversal of a downward trend.
The logic of these three trading opportunities is the key point of the reversal of the supply and demand pattern. Stocks are commodities, and they will rise when demand exceeds supply, and fall when supply exceeds demand, no matter what the reason is, whether it is a fundamental reason or any news stimulation, it must be reflected in the supply and demand pattern. An unbalanced supply and demand pattern generates a trend. Therefore, we only need to place orders at this "key point of supply and demand pattern reversal," and the probability of success will be greatly improved.
Advertisement
However, it is not easy to grasp this "key point of supply and demand pattern reversal." The most important quality needed is to learn to be patient. I believe that "waiting" is a state, which cannot be replaced by learning any technology, but is a thinking pattern rooted in the heart.
Waiting is divided into two situations:
1. Before entering, patiently wait for the opportunity to appear, patiently wait for the "key point of supply and demand pattern reversal," and only place orders at this key point.2. After purchasing, patiently hold and wait for the exit conditions to appear. The exit conditions are divided into two: first, the re-emergence of the "key point of supply and demand reversal". In other words, when you buy, it is when demand overwhelms supply, and when you exit, it should be the exact opposite, when supply overwhelms demand. Second, if an unexpected event occurs after the purchase, and it does not go up as you expected, but instead breaks through the stop loss, then exit according to discipline and stop loss.
If you insist on doing this, making your transactions at key points, and only operating when conditions are met, most of the time resting outside the market and waiting, I think the probability of making money will be greatly improved. The reason why most of us have not achieved high investment returns or have difficulty breaking through the bottleneck is that we trade in the market all the time, every moment, every day, and are always heavily or fully invested, naturally there is no waiting. Because of this situation, even if you have made money, you will lose it again.
One cost of "waiting" is that you will miss some opportunities. This may also be the reason why many people cannot "wait". There are many opportunities in the market. If we always "wait" until the key point to place an order, it means you have to give up some opportunities and resist some temptations, because the market will also fluctuate up or down besides the "key point". For example, when you are optimistic about a stock, it is rising, and the rise indicates that demand is greater than supply, but it has already missed the point of supply and demand reversal. This rise may be halfway, or it may be at the end. If you can't resist the temptation, you may chase high, and many people lose money because they missed the best buying point. This is a temptation because although it is not at the key point of supply and demand reversal, it is rising, and you will always feel regret and constantly feel annoyed when you see it rising. Therefore, you cannot "wait".
What if you miss the key point? The answer is to continue waiting for the next opportunity, waiting for the next "key point of supply and demand reversal", instead of forcing yourself to trade. If we can always do this, I think the success rate will be greatly improved, and the pursuit of rises and falls will be greatly reduced. However, most people cannot do it, most people are emotional transactions. Therefore, I say that the highest realm of a trader is to wait.
Patience and waiting do not mean "inaction"
The money earned from stocks is a fee for patience. Patience is the highest artistic realm of stock market investment. Whether it is rising or falling, as long as you can hold your breath, you have the opportunity to make money. Patience and waiting do not mean "inaction", but represent a non-operational technology, the highest level of technology!
Therefore, stock investment can be said to be that patience and waiting run through the entire trading process from beginning to end, accompanying all the operational behaviors of stock investors.
Patience is not negative, waiting is not empty waiting. Patience is to save energy and sharpen one's skills, waiting is to prepare for battle. The decision to be patient needs to be constantly revised and strengthened according to the changes in the situation.
A high degree of patience at least needs to have the following conditions:
1. A stable mentality, not worrying about gains and losses.Translate the following passage into English:
II. Strategic Vision, Insight into Major Trends.
III. Rich Experience, Understanding of Human and Stock Nature.
IV. Firm Confidence, Ability to Make Independent Judgments.
As for the battles in the stock market, what should one endure?
1. Endure Loneliness: Diligently gather information, conduct long-term research, continuously review successes and failures, and summarize experiences.
2. Endure Non-Conformity: After all, only a minority make money in the stock market, with more than 80% of retail investors losing money. When everyone is optimistic, be willing to sell against the crowd; when everyone is pessimistic, carefully analyze and find opportunities against the crowd.
3. Endure Fear: During market crashes, do what others dare not do, and search for high-dividend quality stocks at low points.
4. Endure Greed: Stock prices often rise irrationally, or manipulators aggressively push prices to attract retail investors. At this time, one must endure greed, know when to stop, to avoid being trapped.
5. Endure Losses: If you choose the wrong stock or the wrong time, and the market reverses as expected, you must endure to cut losses. As long as the green mountains are there, there will be firewood to burn.
6. Endure Media Temptation: Do not be swayed by rumors. All kinds of information must be filtered through the brain, carefully analyzed, and then actions can be taken.7. Endure the temptation of market timing: The stock market experiences one or two market trends each year. It is essential to have confidence in the stock market and in oneself.
8. Endure the urge to trade: If you do not possess the knowledge and conditions for stock investment, you should resist the temptation to trade. First, learn and enrich yourself to improve your trading skills, and then you can enter the market to compete.
Common trading psychological issues:
The first and most terrifying trading psychological issue is losing control. It is very frightening when a trader loses control, knowing that they are acting recklessly and trading without any strategy, but they cannot stop themselves, possibly insisting on making a profit of one or two points with a heavy position, even if the loss at this time is ten times the cost. In this state, it is likely that even if someone persuades them, it may be useless.
When out of control, it is easy to engage in "revenge trading". The money lost on this stock must be made back on this stock. For example, if a trader goes long on 100 shares and loses 20 points, they immediately switch to shorting 200 shares, hoping to make a profit of 10 points to break even. If they lose again, they immediately switch back to longing 800 shares, trying to make a profit of 5 points to break even. This cycle repeats, not based on market trends, but to satisfy the inner desire to win back immediately.
The second trading psychological issue is confusion. Confused trading psychology is reflected in thinking one thing and doing another. For example, a trader may claim that a certain target will rise sharply in the future, and they will hold it for a long time. The early development of the market also meets their expectations, but the good times don't last long. Soon, the price of the target falls into a shock or retreat. Maybe at this time, the target is just about to rebound, but the trader can't stand it and directly closes the position and leaves the market, claiming that the market may be wrong.
Another typical confused trading psychology is knowing that the maximum drawdown of the trading system you are using may be 40%, and psychologically, you think you have accepted this system. However, when the system continues to lose 10% to 20%, it is often just because of too many consecutive losses that you give up on the trading system and keep looking for optimization solutions. Shouldn't you first optimize and then use the trading system? Confused trading psychology is often caused by impulse, and traders often claim to be calm and rational, but in fact, they have not thought it through at all, and the result of such trading is definitely bleak.
The third trading psychological issue is suspicion. Traders with this psychological issue more or less believe in the "conspiracy theory", always feeling that some institutions are the "black hands" behind the market manipulation, and it is these so-called "big players" who decide the ups and downs of the market. Therefore, suspicious traders are often skeptical about everything. They want to hear so-called "inside information" and constantly pay attention to other various information, and also watch the changes in the market trend. A slight change in the trend must be combined with various information for association. The result of suspicion is often that even a good market cannot hold the order, and it is impossible to implement any trading strategy. The root of the suspicion psychological issue is essentially the lack of a deeply rooted trading worldview and the trading beliefs derived from it.
The highest realm in the stock market is to learn to be empty. People who are always full of positions throughout the year are the most ignorant about stocks and the most unsuccessful investors! Because only by learning to be empty can you effectively avoid risks and have the opportunity to invest heavily in promising stocks. The stock market is like a battlefield. If you don't fight, you won't lose, but if you fight, you must win. When you are not sure, learning to be empty is the best strategy.Keeping an empty warehouse is an art.
Firstly, when the stock index is going down and stock prices are continuously falling, it means that if you keep your warehouse empty, your assets do not shrink during the downtrend of the stock index. From another perspective, you are actually increasing your capital. Some might say, "Brother, that's not right. There are also stocks that rise when the stock index is going down, and if someone catches them, the account funds can also increase." Indeed, there are many stocks that rise when the stock index is going down, and some people's assets not only do not shrink but also increase during the downtrend of the stock index. However, there is a key point here: Do you have this ability? Do you have this stability? Are your hands tough enough? If not, please go back to the beginning. No participation, no harm.
Secondly, what is an empty warehouse? Not buying stocks is an empty warehouse, which is superficially correct but actually wrong. It is called an empty warehouse only when you leave at the high point every time. For example, if you are empty at 3300, and the market falls to 3000 to build a bottom and rebound, what is your starting point for making money when you participate in the market at that time? Of course, it is 3300, not 3000. In other words, the base profit point of your transaction is 300 points higher than others. Where does this profit space come from? It is brought by the thinking of an empty warehouse. So as long as you use the thinking of an empty warehouse reasonably, even if you have been trapped at 6000 points, 5000 points, you can also achieve cost recovery and even profit through the thinking of an empty warehouse and trading strategy. Being empty is a great learning, understanding the subtleties, and benefiting endlessly.
1. Short-term rises and falls have unpredictability.
Can short-term rises and falls be predicted? Personally, I do not deny that there are investors with high accuracy in short-term predictions. However, it is absolutely impossible to predict accurately all the time. Why?
The factors affecting the rise and fall of the stock market are uncertain, including international situation, economic cycle, fiscal policy, monetary policy, macroeconomics, military, and investor sentiment, etc. Can these comprehensive factors be predicted in the short term? They cannot. Especially the uncertainty of investor sentiment, no one can predict it accurately.
So, for the short term, no one can predict with 100% accuracy. Even if the prediction is extremely accurate, it is only once or twice, and it is impossible to be precise every time. This is an impossible thing.
2. Only buying points, no selling points, is a failed investment.
What is similar about the situation of many investors in the stock market? What is the most obvious similarity? It should be: knowing how to buy, not knowing how to sell. This should be the "common disease" of ordinary investors.
After paying attention to the stocks of a listed company for a period of time and making an investment, no matter whether the stock rises or falls later, there is no concept of time, nor a concept of space, and they do not know where to sell the stock. Several situations usually occur:1. Stock prices have risen, but there is no decision to sell, and they continue to rise until they eventually fall back to the initial price, at which point the choice to sell is made.
2. Stock prices have fallen, and there is no stop-loss point. They continue to fall until they are deeply "trapped," and finally, at some point in the future, they can no longer endure and choose to "cut their losses."
In this case, investing with only a buying point and no selling point is a failed investment. There is a saying in the stock market, "Strategy is greater than the trend," which means that with the execution of a strategy, there are buying and selling points, and it is possible to better profit in the stock market and avoid risks.
III. Having a buying point, a selling point, and not being empty, the risk is still high.
Whether it is the US stock market, Hong Kong's stock market, or the A-share market, not understanding how to be empty is difficult to truly make a profit. Although the US stock market shows a "ten-year bull market," the Dow Jones Industrial Average only samples the most high-quality companies in the US stock market and cannot represent all US stocks. Moreover, when the bear market comes, the US stock market also shows a "rapid decline."
We mentioned in the first point that short-term trading is unpredictable. Since it is unpredictable, always being active in this market, even with a strategy of buying and selling points, it is difficult to achieve high returns. The correct approach is to follow the trend, be empty when necessary, especially during times of trend risks and financial crisis risks.
IV. Being empty is not losing opportunities, but waiting for opportunities.
Investors enter the stock market with the same goal of "profit." Without methods, it is "barehanded fighting," which is very disadvantageous. Therefore, it is necessary to learn to plan and execute strategies. What about being empty? It seems that nothing is done, but in fact, during financial crises and market fluctuations, not moving and being empty is a victory.
"Being empty is a realm, and investors who cannot be empty cannot become top traders." Of course, even professional investors who do not understand how to be empty cannot become top traders. Only by going with the trend can one become a great trader.