one

Barriers to trading are mainly technical bottlenecks and mentality bottlenecks. There are also several types of technical bottlenecks:

1) Bottlenecks caused by insufficient accumulation of own technology

For example, new values and things like Seto will only be a bull market, not a bear market. After the capital was suddenly 10 times or even 100 times larger, I suddenly discovered that I wouldn't be able to do it, and I couldn't even stop losing money. Can't do it. It seems like liquidity is insufficient, but in reality, technology accumulation is still insufficient. The level does not meet the requirements for operating that level of capital. This bottleneck can only be solved by gradually increasing the quantity. The explosive increase in scale was actually a disaster.

2) Model bottlenecks

The model of only looking at the market for one or two days is a huge bottleneck to increase capital. For example, some lobbies are unable to make blue-chip stocks, and hundreds of millions of dollars of capital are still being used for a very short period of time every other day, and they won't make money by holding shares. This technical bottleneck is quite large, and the results may not be able to beat the market, and it will be very difficult to rise to the next level.

3) There are more mental bottlenecks:

Some have made a lot of money; they think it's enough; they don't want to do it anymore; they have no desire to make money. The bottleneck will soon be over; from now on, we will basically rely on the sky to eat.

There are also huge bottlenecks caused by poor mental endurance. Those who are used to winning and losing tens of thousands of thousands a day reach profits and losses of millions or even tens of millions in a day, and not being able to improve their mental endurance is also one of the bottlenecks. Slowly growing capital performs much better in this area. Sudden capital growth is often not enough.

two

Successful transactions = the right approach+long-term persistence.

Many people don't get past the first threshold for the rest of their lives, which is to establish their own trading system and find methods and strategies that can achieve long-term stable profits. This is a technical level. Of course, as long as you are smart enough, willing to think, and have a long period of actual investment experience, I believe that the first threshold can be overcome no matter what, that is, get rid of the retail mentality and start to achieve profit.

A small number of people have found this method, but it is still difficult to do anything, because they have not been able to stick to their own trading system and strategy for a long time, value short-term profits, and go against the trading system. When the trading system recedes during difficult periods, it is even more difficult to stick to, and they have failed to achieve consistency. This is the level of truth.

However, this threshold is the highest. It requires not only rich practical investment experience, a deep understanding of the trading system and market, but also one's own personality, values, and understanding of the world to reach a level where one can control and stick to the trading system. Taking the trading system as part of a lifestyle, integrating the trading system into the mind, integrating the trading system into the soul, and integrating it with the trading system to achieve the effect of doing nothing and passive investment, I think it's about the same.

Of course, the problem of consistency can be solved technically perfectly by using programmatic trading, but in practice, how can we insist on executing every transaction signal of programmatic trading, and how to maintain confidence, control risk, and continue to persevere as the trading system continues to retreat is actually the same problem.

three

I often compare driving training to playing with a car

1. Can drive; 2. Can repair cars; 3. Can modify cars; 4. Design and manufacture ordinary cars according to circumstances; 5. Have your own ideas and create new concept cars.

This is a gradual process. If you put it in trading, it would be:

1. Execute a normal system with a peaceful mindset (introduction)

2. Know how to solve system problems

3. Can find a system suitable for you after appropriate modifications based on commonly used systems

4. Proficient in the development system

5. Have your own investment philosophy and create an original investment system based on the investment philosophy

There are several bottlenecks in every step, and there are bottlenecks in every step of the way. In fact, most people are ready to do a big job without learning to drive, and their mentality simply cannot be selfless in operation. Therefore, a bad mentality in stop-loss, take-profit, short positions, holding, etc. will always be an eternal bottleneck...

four

Generally speaking, traders will experience “bottlenecks” in the process of growth, mainly as follows:

1. Thoughts are stagnant;

2. No matter how the trading system is optimized, the performance of the system is difficult to improve or even regress;

3. The account net worth curve hovers or pullbacks.

Let's talk about the last situation — the account equity curve hovers or pulls back. The reason I mentioned this situation first is because it is essentially a kind of “pseudo-bottleneck” — the trading system is in a pullback period, not the trader is in the bottleneck period.

Any trading system has a specific pullback period, for example —

The trend trading system is in a recovery period in a volatile market;

The volatile trading system is in a pullback period in a trending market;

The long-term trading system is in a correction period in a weakly trending market;

Short-term trading system, in a correction period in a strong trend market;

Large position trading system, in a correction period in a small amplitude market;

The small-position trading system is in a pullback period in a high-amplitude market.

No matter how optimized, in a market state that is logically opposed to the core concept of the trading system, the trading system will inevitably enter a pullback period. I died in this situation; my death on this day was not a war crime. This is a systemic risk, and it is not something human can control.

Therefore, after optimizing the trading system to its current stage and continuing to forcibly optimize, the marginal utility will become more and more obvious; if you are a little careless, it will also enter “negative growth.” (Official WeChat public platform ID: qlhclub) At this time, the best choice for traders is to do their best, listen to fate, execute transactions consistently, and wait for the system to pass during the pullback period. Of course, the premise of “doing your best and listening to fate” is a prudent systematic trader. For unstructured traders, there are no consistent standards, and the concept of a “pullback period” is naturally impossible to talk about.

There are both narrow and broad bottlenecks. A narrow trading system is commonly referred to as a system that provides trading points and fund management; a broad trading system is a trader's background related to trading.

1) Bottlenecks in the narrow sense

In the process of learning to trade, I often encounter situations like this - I feel that I have learned almost enough about the knowledge related to trading. No matter what book you read (or communicate with others), it's either “wrong” or just plain old. But my mind is still full of confusion and confusion. You don't have complete confidence in what you judge as positive expectations; what you judge as having negative expectations is still a bit of luck. In terms of optimizing the trading system, I feel that there is still plenty of room for improvement. Although “everything has been used to the extreme,” there has been little effect.

The situation described above is usually one of the bottlenecks mentioned. Actually, I think using the “platform period” to describe it is closer to the essence of the matter --

There is a need for integration between new trading knowledge and existing trading knowledge; there is an integration between trading knowledge and trading practices.

Integrate, like using water and noodles. The process of mixing noodles produces neither water nor noodles; the end result is to make the dough needed for food. Similarly, trading knowledge is water, and trading practice is comprehensive. After integration, what you gain is a trading experience — the foundation on which your own trading system is built.

In layman's terms, it takes practice and time to digest foreign knowledge into your own.

There are some classic books in the trading field, and I often read new ones. The most obvious example is “Memoirs of a Stock Trader”:

When the deal hasn't found its way, read this book and just chew it;

You will only understand the value of this book after reading it after having a certain level of trading practice;

As trading practices continue to be accumulated and updated, reading this book every once in a while will bring new gains;

Even if you become a trader who can make steady profits, this book will still be instructive for traders for a long time.

The “Reading History” in “Memoirs of a Stock Trader” is an example of integrating classic trading knowledge and trading experience.

The accumulation of trading knowledge and trading practices is spiraling interactively. Every intersection forms a platform (platform period). When the trading experience breaks through this platform, it means that the “level” of trading has been raised to another level. It then entered a new growth cycle.

When traders are at the bottleneck of integrating knowledge and practice, don't be anxious or hesitant. The biggest possibility at this point is that the accumulation of trading knowledge and the accumulation of trading practices is going too fast:

Trading knowledge is moving too fast, and understanding is not supported by trading practices;

Trading practices are moving too fast, and there is a lack of guidance on trading knowledge in operation.

If your trading knowledge is moving too fast, you might as well stop studying and communicating and focus on trading practice for a while; if your trading practice is moving too fast, you might as well stop trading or system testing and relive the classics you've read.

2) Generalized bottlenecks

Why do some people make value investments and others speculate on prices?

Why do some people prefer fundamental analysis and others prefer technical analysis?

Why are people imitating Graham, Buffett, Elliot, Gann, and Livermore, actually just cannon fodder in the trading market?

The trader's life background will affect the trader's perception of transactions, which in turn affects the construction of a narrow trading system.

For example, if you persuade a college student who is new to the foreign exchange market to temporarily abandon Graham and Buffett's theory, the other party will say, this is the father of value investing; this is the richest person in the world! If you recommend value investing to an old Chinese friend, the other party will disdain and use it for nothing in China! This is the context of life, and its impact on the perception of trading.

As life experiences are accumulated and updated, the perception of life will change the perception of transactions, which in turn changes the narrow trading system. For example, college students back then, after becoming old shareholders, may also feel that value investment is being put to good use.

Therefore, many of the bottlenecks relating to transactions actually require integration between the trader's broad trading system and the narrow trading system.

An obvious example is that the same trading system performs very differently in the hands of different traders. In large part, this is because traders have different broad trading backgrounds. No matter how traders optimize the trading system at a narrow level, it is difficult to break through due to their own broad trading background.

Moreover, compared to the integration of knowledge and practice at the level of the narrow trading system, the integration between the broad trading system and the narrow trading system requires more practice at different levels and a longer period of time.

We are at a bottleneck at a broad level, and we cannot expect a breakthrough in the short term. After all, accumulation at the level of life and accumulation of trading practices as a part of life are not on the same level. In the previous article, we mentioned “optimizing the trading system to the best of our current stage” to be the best version of ourselves at this stage.

The truths in a microscopic world such as the trading field are in harmony with the truths in macroeconomic life. This belief has enabled me to carry on with my trading career despite numerous early failures.

In deliberate transactions, we discover connections with life; in life, discovering the shadows of transactions will accelerate the integration of the broad and narrow levels. This kind of thing that seems “nothing but eggs” actually determines a person's success, failure, and performance in the trading field to a large extent.

3) Conclusion:

The bottleneck of trading is more like a milestone on the path of learning and growth in trading. It suggests that we have reached a new “sideways trading zone” and need to “digest the market” and look forward to continuing to “rise.”

five

What are the bottlenecks in the transaction? It varies from person to person, and there is no uniform answer. However, you can experiment with a method where your bottlenecks are.

List all the factors you think are currently affecting transactions, such as personality, time, amount of capital, trading methods, methods, psychological endurance, etc. Anyway, I will list everything you can think of that has an impact on the transaction. After that, start making the plate in the same way as before. For every transaction, regardless of profit or loss, check the influencing factors of this amount on the list above. Every time a transaction is made, a circle is checked, and when the table is counted, profit and loss transactions are counted separately. Do it over a period of time, one month, one quarter, and summarize to see which column on the form has the most hits (maybe several factors have as many checks), and which (several) is the current bottleneck. The advantage of this is that it allows for more comprehensive statistical influencing factors, and does not attribute every loss to mentality or some other aspect. So, it's best to keep doing this job. Until the day you can no longer trade. It's even more impossible to talk about how to break through the bottleneck. Overcome it, no matter what method you use. Maybe I can overcome it, maybe I won't be able to overcome it for the rest of my life...

The wooden barrel said, “I'm surrounded by 12 wooden boards. No matter which board is short, it's not full of water. All 12 pieces are the same length; they're just filling this bucket; the board can keep getting longer. Therefore, no matter how long the trading experience is, there will always be bottlenecks. Just like some big bulls were very successful before, and their earnings suddenly declined. It's not a status issue; they have encountered another bottleneck. After breaking through, the earnings will be an order of magnitude, and the mentality will also reach the next level. The wooden barrel has already been turned into a wooden cylinder.

six

Keep a good record of transactions, learn from your own transaction records, and constantly review and reflect on yourself. In addition to age and experience, which slowly grows over time, trading takes time. If you find that you lose money no matter how you trade, it means that the method is wrong, but in fact, the most important thing in trading is trading mentality. Trading methods are very important, but only second. If you don't break through trading mentality, you won't be able to make a profit even if your trading method is good. As you learn from your mistakes and improve yourself, you will slowly improve. I hope you gain something in your trading journey.

I started dealing in 2011, and more than half a year has passed since my last answer. Over this period of more than half a year, my transactions have changed a lot, and now I am able to answer this question more clearly. The biggest bottleneck in trading is not the trading method. In other words, no matter how good, perfect, or effective your method is, it can't make you profit continuously. Successful trading or continuous profit in the market year after year is based on three elements: trading methods, trading psychology, and money management. Among them, trading methods and money management can be found in many books, but trading mentality needs to be gradually formed by yourself during the trading process. No one can help you complete this stage. No one can help you learn trading psychology after reading it. No matter how many books you've read, the answer to the deal isn't in the book, but in your own deal.

Are you afraid or greedy for your next deal? What is your state of mind if your current position is losing money? What about profit? What about big profits? Are you constantly changing your trading methods without knowing it at all? Would you feel like you've learned how to trade and become a professional trader by profiting from one or two trades? Would you be hopeless about the future because of one or two losing trades? Do you trust your trading methods? Would you tell others that you predicted that the market would fall and then rise tomorrow? Will you always keep an eye on price fluctuations? Are you in the same mood as the rise and fall of the market every day? Would you trade this symbol today and trade that symbol tomorrow? Do you trade frequently every month? Are you aiming to learn to trade first or make money first?

As soon as most people arrive at the market, their first goal is to make money rather than learn. Trading is like buying a lottery ticket. After buying, they stare at the screen to see if they have won the lottery, but trading is far from that easy. If you want to break through the loss stage, you must keep a good record of transactions. The best learning material is your own trading records. Learn from your own trading process, and then gradually improve. You will have an epiphany one day, and you will suddenly realize that you have always ignored what you think exists. This is trading mentality, and after the epiphany, you may be able to continue to profit using simple trading methods. At this point, you can break the bottleneck and enter a new stage.

seven

Personally, there are two major bottlenecks:

1. The transaction itself. At the beginning of trading, it was actually an exercise. The real bottleneck in this state of affairs first appeared when separated from reality. It wasn't interfered with in real life in any way, and at the same time, trading didn't interfere too much with life. So what kind of bottleneck is this? It's about constantly running into unexpected things until you fully adapt, and reduce your human weaknesses to the extreme until you know that your limits can no longer withstand greater challenges, and so on, what else? This is the real bottleneck.

2. Practical issues. This second bottleneck comes as a result of the first mentality and understanding of transactions. Old Bird no longer pursues huge profits, but rather is stable and low-risk. There is one problem here: own capital must reach a certain amount; otherwise, stability and stability are not very meaningful. Many people say: Can you make a stable profit, why not do it yourself? How much compound interest can you make in a few years?

These are easy to say, but not easy to actually implement. The second bottleneck is the question of the amount of capital. The choice between using own funds to operate on one's own or entering an institution with a larger amount of capital or soliciting customers to raise capital. After two levels of elimination, there are very few good traders to see. A qualified trader is not necessarily excellent; he needs a certain time and opportunity to excel. Those tens of millions of people who have doubled several times in a short period of time are not replicable, so they are not among the above.

eight

Maintain principal and control risk. As long as you can strictly control risk (strictly control the maximum loss of no more than 1% in a single transaction), no matter how the market changes, you won't die. In reality, everyone is a money manager, but most people have stable losses (buying consumer goods). Many people don't know that profit is actually the reward of risk management, not the reward of predicting the market, so most people pay attention to predicting the market but not risk control and management. The bottleneck is putting risk control first. Why should you pursue consistent trading rules because you need to control risk, If it wasn't for risk control, we wouldn't have any rules; just buy whatever you want, just sell whatever you want.

nine

The bottleneck in transactions is achieving consistency. If you can strictly follow the rules you set for every transaction, then you can break through this bottleneck. But it's easy to know and hard to do. Too many times we have broken the rules by wanting to make our own subjective judgments about the market. Maybe this amount will make you more money, but in the long run the benefits outweigh the losses because you've lost the only certainty that exists in trading — your trading rules. Achieving consistency is really difficult. Mentality and technology are indispensable, but this bottleneck must be overcome.

tens

As far as my own experience is concerned, there are different bottlenecks at different times. Some people speculate on foreign exchange for 5 years, lose for 5 years, and speculate for 10 years. There are no bottlenecks to talk about for this kind of person. The prerequisite for creating bottlenecks is that you are constantly learning, constantly improving, and being “on an upward path.” Therefore, as far as the transaction itself is concerned, it requires diligence and effort before it encounters a bottleneck. Failure to do so would be completely groundless. Every day, in addition to watching trades, I spend 3-4 hours reviewing trading, reading all kinds of trading-related books and articles for about 1 hour, and sometimes I dream about trading at night...

So there's no specific answer to your broad question; it varies from person to person. For amateurs, trading is not about bottlenecks; it is an interest and hobby; it is a very small aspect of life;

For professional traders, diligence is the only channel for professional traders to succeed. If you ask Kobe why he has achieved so many brilliant records in his professional basketball career, he will definitely tell you that it is because of hard work and hard work.

eleven

The bottleneck in trading is that they only focus on transactions and do not transform their ability to trade into commerce. There is no need to elevate a transaction to the level of ideology and philosophy; it is only a business. Livermore's ultimate failure also stems from this. This is a common problem of many immature traders. They focus too much on trading and don't know what you are trading for. For what purpose, a successful transaction does not mean that your business is successful.

Many traders should spend some effort exploring successful business models. No matter how good your trading skills are, you will only be a mouse for the rest of your life; you have to become a financier and a financial merchant.

twelve

From the root cause, there are only two reasons for these bottlenecks. Most people are stuck in the “integration of knowledge and action,” while others have gone through the “integration of knowledge and action,” but they are unable to stop being “greedy.” However, I don't think everything will be fine if I get through these two bottlenecks once. Other things in my life or my mood swings may one day cause these two bottlenecks to return again.

Therefore, you must always be fit and nurtured. The first time I overcame these two bottlenecks was two years ago, but I can't guarantee that I will last a lifetime later. Of course, this is only for individual traders. Even if these bottlenecks cannot be overcome, the better result is that you can use a large platform as a cog, get paid without taking the risk of trading, and not leave your favorite trading industry.

Editor/Jeffrey