Recognizing when to place heavy bets and when to enter and exit quickly is the true essence of trading.
Many of my friends know my trading style, which is aggressive yet cautious, decisive yet patient. Many people ask me what the secret is to surviving in this market. Today, I will lay it out.
We come to this market with the core purpose of making big money. However, there are many strategies to make money, and the only two strategies that have truly allowed me to make a lot of money are: one, placing large bets on higher time frames for long-term positions; and two, using a small investment to make a big return, leveraging a key small time frame candlestick to drive the entire wave.
The underlying logic of these two strategies is completely different, and their applicable scenarios are also different, but both have been tested in my years of practical experience.
First strategy: No trades for three years, then profit for three years
The core of the first strategy is that when facing historical large cycle opportunities, one must bet heavily. Simply put, it means patiently waiting for that kind of 'big opportunity that is obvious at a glance' and then going all out.
But do you know how great the risk of taking heavy positions is? Taking heavy positions opens up risks while also opening up profits! Therefore, the logic of heavy positions in this strategy is based not only on large cyclical opportunities in the technical aspect but also on large cyclical opportunities in the fundamental aspect.
You must first have the vision to see clearly, the courage to take heavy positions, and the patience to hold! Big opportunities at a high level do not happen overnight; they must include N stages of medium-level corrections. You may be able to withstand small-level corrections, but can you withstand medium-level corrections?
I share a real experience: that's how I got my first pot of gold. In the first half of 2014, the stock market was very tough. Back then, I was still using 3x margin trading, and it didn't rise for half a year; you can imagine the psychological pressure. I couldn't sleep every night, repeatedly checking if my analysis was wrong, forcing myself to maintain confidence the next morning.
So, in a sense, I greatly admire traders who can stick to their judgments. Their vision, courage, and patience are all top-notch!
The core of this strategy must be based on fundamentals. It is only a good time to take heavy positions when the price is significantly deviated from its value. Detached from fundamentals, merely discussing heavy positions based on technical aspects is gambling! Because the technical aspect is essentially a probability game, while the fundamentals provide higher certainty.
Second strategy: Small losses, big gains; accumulate small wins for big wins
Because the first strategy goes against human nature too much, I have been trying to build low-risk, high-reward trading strategies. After testing hundreds of strategies, I have developed a method of making big profits from small investments, which can be summarized in one sentence: Increase the winning rate based on risk control, following the direction of odds.
1. Making big profits from small investments is the cornerstone of high odds
Market structure is simply two types: either a trend or a correction. The core of high odds is to seize a medium/large level trend wave, with the method being to intervene at the end point of the medium/large level correction wave.
Specifically, the correction wave at medium/large levels manifests in three types at small levels: converging structure, oscillating structure, and reverse trend wave structure. We intervene at the end points of these small-level structures, using a small-level key K-line to leverage the entire wave segment.
2. Multiple resonances are the guarantee of a high winning rate
Most trading systems enhance the winning rate by widening the stop-loss distance, making it less likely to be swept away, but the cost is that one must trade lightly. While light trading can earn money, relying on light trading to make big money is unrealistic unless your capital is large.
So I improve the winning rate from other aspects:
Level resonance: After a medium-level correction hits an important resistance level, one should also look for whether a small-level trend reversal signal appears. Only when both large and small levels resonate is it a real opportunity.
Variety resonance: Highly correlated varieties, such as Bitcoin and Ethereum, have a higher success rate when they are in the same direction.
Long and short strength comparison: By judging the strength of trend waves and correction waves through the slope and speed of price movements. If the trend wave is strong and the correction wave is weak, the probability of starting another trend is high.
Volume-price analysis: At the end of a correction, volume usually shrinks, and the occurrence of volume-price divergence is a signal that the trend is about to reverse.
3. Strict position control is fundamental to survival
In each trade, I only risk 1% of the total amount, and particularly favored opportunities do not exceed 2%. Because the stop-loss distance is just a small-level key K-line's amplitude, it's a narrow stop-loss, so the actual position is not light.
The brilliance of this strategy lies in its ability to control risks without sacrificing position advantages. By achieving multiple small gains and occasional large profits, it ultimately realizes stable profitability.
Market cognition: Structure analysis like 'Ding the butcher' dissecting an ox
The second strategy is not easy to master. If the first strategy tests vision, courage, and patience, then the second strategy tests more the logical understanding of market structure and the precision of entry.
What is a trend? What is a correction? Detached from levels, a trend is not a trend, and a correction is not a correction. Detached from levels, there is no such thing as left-side trading and right-side trading.
I often tell my students to view the market as a precision machine, not a tangled mess. When you can deconstruct the market like 'Ding the butcher' dissecting an ox, your trading understanding will truly be in place.
Conclusion: The realization of cognition is the final destination
These two strategies form the core of my trading system. The first strategy is used to capture historical opportunities, while the second strategy is for accumulating daily trades, and both complement each other.
In the end, trading is actually the realization of understanding. Every profit you make is a reflection of your correct understanding of the market; every loss you incur is a reflection of your cognitive flaws about the market.
In this market, the most terrifying thing is not losing money, but not knowing why you lose or why you gain. When I truly understood this, my trading path finally got on the right track.
I hope my sharing can bring you some inspiration. Remember, in this market, what you need to do is not predict the future, but recognize the present and make corresponding decisions.
Real trading experts are those who seek certainty amid uncertainty, chasing profits under the premise of controllable risks. This is the essence of trading and the principle I have always adhered to.
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