After ten years of trading, I dare not say that I have "got it", but I have vaguely seen the road to long-term profitability. Recently, there has been an impulse, I want to make a systematic summary of the investment experience of the past ten years, to improve myself, at the same time, I also hope that my experience can be used for reference to the majority of investors.

All these are obtained by myself through a lot of personal practice and observing the friends who make investments around me. Some trading methods are unlikely to succeed in the long run, or extremely difficult to succeed. I am here to admit that I have taken the wrong path in order to avoid future generations from repeating the same mistakes.

I planted a flag on these roads: "this road is not feasible". If you are now experimenting with these investment methods and are destined to read this article, I hope you understand that running on the wrong path is progress even if you stop.

"this road is blocked" to cut off profits and let losses run.

Let's first look at two cases:

Case 1:

You judge that the price of an investment will rise, so you start to go long. The market also gives you a lot of face, and it does rise at the beginning, and you make a lot of money, such as a profit of 1 million. But after rising for a period of time, the market starts to pull back, and you find that account profits fall from 1 million to 800000, 600000, 300000.

Watching profits turn into water, and may even turn profits into losses, resulting in the elimination of your stop loss. A profitable transaction not only did not make money, but ended up at a loss, this result must make you very remorseful, hate yourself why do not give up, why their greed inflated? Why did you let the cooked duck fly?

After learning from the bitter experience, you begin to change. "you must not be greedy in doing transactions in the future, and you will close when you see the good."never let the list of profits lose money" has become your creed. Therefore, in the future, when you trade, once you enter the market and begin to make a profit, you will begin to panic all day long. As soon as there is a change in the wind, you will close the position and go out immediately, and it will be called "drop the bag for safety".

Case 2:

You entered the market to trade, and you also determined the stop point in advance. Unexpectedly, the transaction did not go well and soon reached your stop point, so you came out. However, I didn't expect that as soon as you stopped the loss, the market immediately reversed and rode away in the direction you originally expected. This has happened more than once. If you reflect after the event, will I be the winner of the market if I go through it a little longer?

On the surface, there seems to be nothing wrong with the above two cases, but when I observe the investors around me, most of them lose money because of this:Cut off profits and let losses run. The wrong experience led them to repeat small deals with big losses.

Just imagine, will an investor who keeps losing a lot of money be a long-term winner in the market? If you think about it rationally, you will understand this truth. I can assert that big losses and small profits are a common fault of almost all failed investors. If you can solve this problem and make a big profit with a small loss, then you can basically be a winner in this market.

For these two cases, where on earth did they go wrong? For example, is it true that "do not let profitable positions lose money", which is admired by many investors? In other words, how to do the right thing for these two wrong investment experiences?

I would like to give you a profound and simple analysis.

For case 1, suppose you enter and go long on December 7, 2015. the entry price is $1060, the original stop price is $1040, and the target is $1200. After the entry of the transaction, the market did not run smoothly, operating near the cost price for almost a long time, and even had to endure floating losses for some time. If you keep dropping bags for safety during this period, then you may earn some sesame mung beans. It can be said that every time you drop bags for safety is wrong.

On January 6, 2016, gold finally broke through the volatility range, your position began to turn a profit, the first wave rose to A point ($1113, a profit of about $50), and then the market began to pull back, your profits will come back, and at the lowest point, the profits are almost all taken back. If you are in accordance with the principle of no loss, you should have played by now. Once you come out, then the gold boom will say goodbye to you completely.

Please pay attention to the following key points

The first point:You should stick to your position until you prove you wrong.For example, in the original concussion range, you can only play if the gold falls below $1040, otherwise you have to hold your position, which is wrong either to stop profit or stop loss.

The second point:Only when the market breaks through the resistance level of the concussion range can the stop loss be moved up to the lower edge of the concussion range.Specifically, only after gold steps back on the trend line can you raise the stop loss a little below the trend line. Of course, when the market has constantly broken through the resistance level, for example, if the gold in this case rises above 1130, it must not lose money.

The third point: when to close the position is a big problem. As the saying goes, it is the apprentice who will buy and the master who will sell. It is not easy to solve this problem, but one thing is clear: trend investors must put up with profit-taking and floating losses, and never rush to close their positions because you are afraid of profit-taking. As for how to close the position, in short, the principle for trend investors to enter the market is:The trend is over before coming out, at least technically there must be a relatively clear signal of a peak, or a major change in fundamentals.

For many investors in case 2, the reason behind it is simple: there is something wrong with your stop loss, as soon as the market turns after the stop loss, or returns to the stop loss level soon. To be exact, there is something wrong with your stop loss, and the most common way is to stop it too narrow. For example, if you go long at 1060, your stop-loss order is at 1050. The correct stop order setting is placed below the support level or a little above the resistance level, such as this time gold, the front low is 1046, then you buy the stop loss order must be a little below 1046.

Of course, there will be fake breakthroughs, but the probability of such fake breakthroughs is low, even if the stop loss is lost, on the whole, you are advantageous in terms of probability. Stop loss is also a very skillful knowledge, not only loss is not good, will be blocked by the market, but random stop loss is not good, this is chronic suicide.

Finally, it ends with a sentence from Livermore:

". Study the overall situation and hold the position. I do not wait impatiently, do not panic when I suffer setbacks, and know that this is temporary. I once shorted 100000 stocks and watched the stock price rebound rapidly. I expected this to happen, but I still stood still and watched the 500000 floating profit disappear. I had no idea of covering the short-selling stock and selling it again when the stock price rebounded, because if I did, I would lose my position and make a lot of money for you. "