Investing is not a 100-meter sprint, but more like a marathon, where all participating investors are not competing on who runs the fastest, but who runs the most steadily. Often, many investors do not truly understand this point, and they only think about how to get rich quickly, which is the main reason for their eventual exclusion from the market. In contrast, successful investors have a completely different mindset and attitude.
They know that success requires a long-term vision, and to overcome human weaknesses, one must have the confidence and execution ability to adhere to a profitable model. Michael Steinhardt, as one of the most successful fund managers on Wall Street, is extremely skilled at short-term investments and has strong analytical and execution capabilities, known as the "Father of Short-term Trading." In 1993, he topped the Forbes rich list with a net worth of $300 million.
Advertisement
Steinhardt is not only extremely accurate in directional judgments but also has rigorous execution in operations. In 1981, he used $50 million to buy $250 million in bonds, making a net profit of $40 million from this investment. At the end of 1984, he bought $400 million in medium-term government bonds, earning $25 million, although a large part of the money was borrowed using leverage.
In an interview, Steinhardt said, "There is no 100% winning trading method. If you have a tested and believed to be profitable trading system, then you should execute trades according to the system's signals." However, there are many factors that affect execution, including confidence in the trading system, personal character, and the impact of surrounding noise, etc.
For example, after a fundamental analysis, you have concluded that the price will rise, and the system has given a signal to enter a long position, but someone says that there will be a better entry point later, or that there is currently technical pressure, etc. Even if these statements are correct, they are noise for you.
Even if your entry point is not good, you will still get your share of profits. So, when your trading system issues entry and exit signals, you should decisively execute according to the signals. Do not harbor illusions and wait for a better position to appear. Because, from a long-term perspective, the cost of lacking execution and violating the system is much greater than the cost of trading according to the system.
Regarding how to improve the trading system and enhance execution in investment, the following points are summarized:
1. Trade selectively and in moderation
Many novice investors are keen on frequent market transactions, but this does not necessarily have a positive effect. On the contrary, successful investors are more willing to wait for opportunities. When they are uncertain about the market, they will adopt a wait-and-see attitude and patiently wait.At the same time, for trades with favorable market conditions, successful investors always maintain 2 to 3 times more capital to cope with price fluctuations. If your capital is insufficient, you should reduce the number of contracts you hold, otherwise, you may be forced to "close your position" due to insufficient funds.
Do not blindly follow when the market rises sharply
In the market, the sharp rise or fall in prices will not rise or fall like a straight line. If the rise is too sharp, it will always adjust, and if the fall is too fierce, it will also rebound. The extent of the adjustment or rebound is relatively complex and not easy to grasp. Therefore, after the exchange rate rises sharply by two or three hundred points or five or six hundred points, you should be particularly cautious. It is better to wait and see than to follow blindly.
Do not expect the lowest price
Usually, after the appearance of high prices, many people feel uncomfortable about the new low prices that appear when the market falls back. Even if various analyses show that the market will fall again and the investment climate is very bad. Investors, in front of these new low price levels, not only will not close their positions, but also have the impulse to buy at low prices, which is easy to lead to the position being directly trapped. Always remember "the past price", let it pass completely.
Strictly implement the stop-loss point
The market risk is quite high. In order to avoid immeasurable losses due to investment mistakes, you must set a stop-loss for each transaction. Once the market reverses and the price falls to the stop-loss point, you should be brave to cut your losses. This is a very important investment skill. This operation will not allow the loss to expand further, and even lose everything. Because even if you cut your losses for a while, the investment capital is still there. As long as there are green mountains, there is no need to worry about no firewood to burn.
Pay attention to opportunities in the market
The market refers to the situation where the market price fluctuates within a narrow range, and the buying and selling forces are evenly matched, temporarily in a tug-of-war state. Whether it is a market in an upward trend or a market in a downward trend, once the market ends, and breaks through the resistance or support, the market price will break through and move forward in a breakthrough manner. For experienced investors, this is a good time to enter the market and establish positions. If the market is a long-term pass, the positions established when breaking through the market will have great gains.Market Price Reversal, Immediate Liquidation
Sometimes, trading is conducted following the market trend, but when entering the market is near its end, one must be cautious. Once a reversal occurs and the momentum seems off, it is necessary to strike back. For instance, after buying in a bullish market, the market suddenly drops sharply. At this point, do not panic; it is best to reflect and, if you can determine that the current trend is a reversal, immediately liquidate your position and strike back.
Comment