Forex Sky Eye: What is the fundamental thing that can make your trading profitable?

The purpose of trading is to achieve profit, the fundamental point of profit is to obtain a positive spread, and the price difference is caused by price changes. Any trading method is to continuously obtain a positive price difference. This is the fundamental logic of trading profit. Others can only be called skills. In this article, we will explain the fundamental logic and tell you how to sort out and design your own trading logic. To put it simply, the cost of a bottle of mineral water is 1 yuan, so the basic logic of making a profit from selling mineral water is to sell it for at least 1 yuan, so as to generate profits (the positive price difference in the transaction). As for how much to sell, and how to sell it is a skill. Why do some people make more money? Some people earn less? How to obtain a positive spread continuously and stably starts with the underlying design of the trading logic. The underlying design of the trading logic determines that different traders have different perspectives and thinking on the application of trading methods and dealing with market conditions in the process of growth. Even in the same currency variety, or in the same market, there will be great differences. Here we stand from an objective point of view, focusing on the following three points: 01 Forming your own independent trading concept Trading concepts are like the three views of people, which determine what height a trader can achieve on the road of trading and The decisive factor of how far you can go, even affects a trader's daily trading behavior, and many traders will find this concept very vague. Let's take a simple example. "Strict stop loss" is a trading philosophy, and "alive" in the capital market is more important than anything. Just like we wear seat belts when driving, although most of the time the car is moving smoothly as planned, when an accident happens, wearing seat belts will become a key action for you to "live". Just as the traffic safety concept of "wearing seat belts" is deeply rooted in our hearts, if we always carry the concept of stop loss when trading, then we can prevent it before it happens. So how do you develop your own trading philosophy? We summarize the following points: 1. Find and list your own problems: how long have you been doing, how much have you lost, and what are the main problems? Start with a list of personal past trading habits, and communicate with traders around the problem. For example, when your child usually eats at home, you think it is normal and no problem, but when guests come to the house, you will find that your child turns over dishes, makes a lot of noise, and is picky eaters when the guests are so obvious. 2. Make corresponding improvement plans for the problem: Impulsive trading and subjective trading are the key to the inability to establish trading concepts, so no matter how many years you have traded, if you do not follow the trading plan, there will be no fundamental changes. Insist on writing a trading journal every day, and fill in a trading checklist before placing an order. This process will last for a few months, and you will be able to cultivate your own good trading habits and gradually form your own trading philosophy. The formation process of a trader's trading idea is very long. It is created by your family, life, study and growth environment from childhood to adulthood. You must strive to summarize and discover your own characteristics and advantages, and design and optimize all the details of your own trading. 02 Determine your own trading style In trading, some people like to do short-term trading, some people like swing trading, and some people prefer medium and long-term positions. This is a different trading style. How to more objectively determine the trading style that suits you? First of all, it is necessary to understand the different profit models corresponding to different trading styles. 1. Short-term trading profit model The three elements of short-term trading profit are: A. Winning rate: medium winning rate, high winning rate is better. [Analysis method] B. Profit and loss ratio: medium profit and loss ratio, high profit and loss ratio is better [Trading discipline] C. Trading frequency or number of transactions [trading frequency] For example: a short-term trader, his short-term winning rate can be kept at a relatively stable About 50%, his profit-loss ratio of delivery orders remained at 1.2:1. Combining these two data, his account must be profitable, but how much profit depends on the third element - the frequency of transactions. With the first two data unchanged, the higher the frequency, the greater the total profit. But the actual situation of many people is that short-term trading often has a high frequency, but the results are not ideal. After reading many books and articles, the crux of the problem is the number of transactions, so the number of positions opened is reduced, but the transaction results have not substantially improved in the long run. The correct plan should be: analyze the winning percentage and the profit-loss ratio in the delivery order. If the winning percentage is low, change some rules in the trading system to increase the winning percentage; if it is a problem of the profit-loss ratio, then look for ways to improve the profit-loss ratio. Methods. These three elements are indispensable for short-term transactions. Each element can directly affect the transaction results. The three elements need to be developed in a balanced manner. 2. The profit model of medium and long-term trading: The important elements of medium and long-term trading are: A. Winning rate: a high winning rate is not required; B. Profit and loss ratio: The profit and loss ratio of the bottom position order must be as large as possible, followed by the profit and loss ratio of the addition position order. Obviously, the trading frequency is not important in medium and long-term trading, and it even takes a long time to lay out a trading opportunity. The most important thing to form a medium-to-long-term style is the profit-to-loss ratio. Usually, the profit-to-loss ratio of the bottom warehouse order is the largest, and the bottom position is well laid out. In order to increase profits, it is also very necessary and critical to increase the position. The higher the profit-to-loss ratio of the warehouse order, the better. For many traders with medium and long-term style, the trading winning rate is not high, and it even looks very low in many cases, but they can have an appropriate winning rate that matches the high profit-loss ratio. Even if the winning rate is not high, the overall account can be profitable. For example: a long-term trader, the data statistics of his delivery orders over the past three years show that the profit-loss ratio remains at 5:1. At this time, even if the winning rate is 40% or even 35%, the overall account can still show a profitable result. If you want to do short-term trading well, you need to maintain a certain trading frequency and try to make time every day to watch the market. The issues of winning rate and profit-loss ratio need to be improved by upgrading your own trading system; if you want to do well in medium and long-term trading, you don’t need to watch the market all the time. , but you need to be patient enough to wait for a good opportunity to place a warehouse receipt. Under the requirement of high profit and loss ratio, the position of adding positions is also very demanding. In the medium and long term, there is usually a phenomenon of sharp profit taking. If the position of adding positions is not good, it may cause changes in the mentality of holding positions, resulting in many bad positions. as a result of. Therefore, every trader should flexibly choose the trading style that suits him according to his own situation and time arrangement, and choose appropriate trading tools (such as various indicators and indicator combinations), and design himself from the elements of different trading styles. Unique trading system. 03 Create your own trading system The general framework of the trading system includes: 1. Standards and tools for judging trends 2. Rules for opening positions 3. Rules for adding and reducing positions 4. Rules for closing and leaving the market 5. Fund management and risk control Rule 6. Psychological analysis of trading and countermeasures Based on such a basic framework, after determining their own trading style, traders need to refine each part of the framework on the basis of mastering a lot of trading knowledge. The short-term style requires a short-term trading system and rules, and the position opening tool and position opening cycle must be able to ensure a certain trading frequency. The rules for opening positions should also be consistent with maintaining a reasonable win rate while achieving a moderate profit-to-loss ratio. For example, choose M15 and H1 two-period resonance to open positions. If you use moving averages, try to choose short-period moving averages to achieve entry and exit signals. The medium and long-term style requires different trading tools to be implemented, and the cycle should at least take into account the daily and weekly charts. If the moving average is at least a medium-to-long-term moving average, for the choice of adding positions, it is necessary to master the skills of opening positions with a high profit-loss ratio in the consolidation range. More time to withstand callbacks and loneliness. Through the optimization of three levels of trading concept, trading style, and trading system, if traders can sort it out according to their own conditions, the underlying design of their own trading logic is completed. Regarding the trading system, if the details in each item are clearer, the resistance will be less in execution. Only through this process can we get closer and closer to the ultimate goal of the transaction, and we can truly continue to advance on the road of transaction and get better and better.