Savvy traders rarely discuss technical analysis; instead, they focus more on communication about fund management.
There are several types of people in the trading market who do not understand fund management:
1. Beginners, those who have just entered the foreign exchange market and wish to engage in trading.
2. Traders, those who never worry about money and have never had their own funds.
3. Losers who have never passed the technical analysis stage; they have been in the industry for many years but are always immersed in the technical analysis of K-lines and indicators, unable to extricate themselves.
The hallmark of a trader entering a stable and mature period is the emphasis on fund management, which is a sublimation of the trading realm. We can see that all winners are implementing strict fund management systems, while losers are always busy with arbitrary, capricious, stream-of-consciousness, and whimsical actions, constantly entering and exiting the market.I. The Trading Capital of Beginners Needs to be Sheltered
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When it comes to the term "shelter," people tend to think of danger and war. Due to the poor ability of beginners to control their emotions and grasp the trading rhythm, they are very prone to making impulsive and retaliatory trading operations. Therefore, the excess funds outside of the position should be hidden in a "shelter." The so-called shelter is a safe account that is far away from the market and should be in a bank account that is unrelated and inconvenient for transfers.
We all know that the ammunition depot should be built in a safe area far away from the smoke and flames of war. The funds outside the position should be placed outside the trading system, otherwise, they are easily "triggered." If the market is unfavorable and the stop loss is triggered, it is necessary to learn to calm down, find and summarize the reasons before choosing a more secure time, rather than immediately re-entering the trade.
As beginners gradually mature, emotional trading disappears, and negative emotions such as fear and greed are controlled, the account funds will be guaranteed.
II. It is Worth Paying Any Price for the Safety of Funds
(Note: The original text was cut off, so the translation ends here.)We observe that the most advanced and lethal American soldiers, equipped with a full set of gear costing hundreds of thousands of dollars, find that the most crucial and valuable part is not the weaponry, but their own defense system. Only when one's safety is ensured can they effectively utilize advanced offensive weapons. Traders are no different; they are engaged in a war of money, the brutality of which is not less than that of real battles with gunfire and smoke.
In the foreign exchange market, as soon as you take a position and expose your funds, there is risk. The primary concern for traders is to ensure the safety of their capital. The risks taken for trading should be commensurate with the potential profits and one's own ability to withstand losses. Never take risks that you are unwilling to bear or find very difficult to bear.
The risk coefficients of different trading instruments vary. Do you still remember the recent one-sided rise in gold prices? For traders, finding a suitable trading instrument is also a significant endeavor. The trend and wave patterns of the trading instruments must be in close alignment with one's physiological rhythm, nerve type, and personal character.
III. Market trading is like a battlefield of bullets and bombs, but one must learn to fight small battles.
Some people believe that the cruelty of market trading surpasses that of a battlefield with bullets and bombs, blood and gore, and real swords and guns, because the market does not provide any warnings or opportunities to correct mistakes. If we, as traders, want to survive, we must learn to ensure that each trade leaves the same trading opportunities for the next one, the next ten, or even the next dozens of trades.Avoid the situation where you go all-in and then get cut in half or even blown out of the market, becoming a "martyr" that the market remembers; also, don't trade a hundred contracts at once and end up losing so much that the next time you can only trade fifty. Understand that after a trader loses 50%, in a state of despair, the possibility of making a comeback is almost zero, and most will struggle a few times and then quietly fall.
So everyone should understand the importance of capital management, learn to fight small battles first, and invest 2% of the principal to build a position. It's good to make a profit, but if you lose, it's only a 2% loss, which can be considered almost unharmed. Adjust your state and trading frequency, and then confidently enter the next trade.
When your state is stable, learn to fight slightly larger battles, and improve step by step, instead of starting with a "winner takes all" battle. Technical analysis is ultimately a matter of probability, and so is the market, so you must increase the number of trading opportunities for yourself, rather than trying to achieve success in one go. The reason why traders who make a living and market winners make money is that they can secure an infinite number of trading opportunities and chances.
IV. Traders should understand the concept of "letting go" and giving up.Traders must understand the art of giving and letting go. To achieve these two points, one must learn about capital management. If you invest all your capital and get cut in half, you will surely be full of regret and unable to "let go"; but if you invest 2% of your capital and it gets cut in half, you will surely remain calm and composed.
The market is also like this; not every fluctuation is an opportunity that belongs to you. To be precise, the vast majority of fluctuations have nothing to do with you. Successful traders all have their unique trading patterns, the frequency and timing of these patterns vary, but they are perfectly matched with their own personality, frequency, and psychological format.
They patiently wait, like a hare waiting for a rabbit, and when the pattern they can control appears, the opportunity comes. They act decisively, grasping the market that belongs to them. Of course, the success rate is not 100%, some are only 70%, but they can profit from this and survive by trading.
The role of technical analysis is extremely limited.
A trader who has been in the industry for ten years told me: "I am looking at the technical chart of gold, and as soon as the opportunity comes, I rely on technical analysis to enter the full position." After hearing this, I said to him, is the technical analysis you believe in different from others? Don't "tire" the technical analysis.He said, "What's wrong?" I told him that going all-in, half-in, or even just watching is a matter of trading strategy, not within the scope of technical analysis. Your decision to go all-in is determined by your trading strategy, not based on technical analysis; technical analysis simply does not have this function.
Our traders often make common logical errors. Transactions made in this state of cognition are chaotic and impossible to succeed. Technical analysis is not omnipotent in trading; its role is extremely limited, and the fundamental difference between winners and losers mainly lies in trading strategies, including risk control and capital management. Immature traders who are obsessed with technical analysis have not yet realized that trading ultimately depends on the depth of trading strategies such as risk control and capital management.
There is no doubt that those who can implement trading to the level of capital management will be winners. Paying attention to capital management is a manifestation of the sublimation of the trader's level and realm of trading.
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