There are nine levels of transaction? Let's see which floor you're on.

Today we are going to talk about the nine realms of trading.

1. The first realm of the transaction, I call it "sponge."

This stage is characterized by crazy absorption and learning of all kinds of theories, knowledge and truth.

From Dow theory to Gann theory, from K chart to graph, from financial analysis to industrial theory, from macro theory to transaction psychology.

In short, everything related to the transaction is frantically absorbed.

This is the only way for everyone to invest and grow up, and it is the process of laying the foundation. The more firmly this foundation is laid, the farther it will go in the future.

It is not difficult to absorb like a sponge, it is difficult to remove coarsening and extract essence, it is difficult to digest, it is difficult to integrate.

However, many people unfortunately stay in the absorption stage. Be proud of how much you know, and be proud of it.

And at this stage, there is still a somersault cloud of Brother Monkey, um, 108000 miles away from a stable profit.

two。 The second realm of trading, I call it "the lost."

The characteristics of this stage are: dear, I understand the truth, but why not make money?

The characteristics of people's complex physiological system are destined to be a long loop from knowing a certain truth to execution.

This circuit may be disturbed and damaged by a lot of things. For example, during the 25000-mile long march of the Red Army, they had to climb snow-capped mountains and grasslands, endure freezing and starvation, and deal with the enemy in all kinds of ways to save their lives. The difficulty of this circuit from being reasonable to being put into place is no less than the 25000-mile long March.

Because on this road you will encounter an extremely powerful enemy, that is, your emotions. Like greed and fear. The power of emotion is so great that it is 100 times more powerful than your rational power.

That's not the scariest part.

The worst part is that this emotion is also a part of you. No matter how powerful the external enemy is, there is nothing to be afraid of. But your emotion is not an external enemy, it is of the same origin with you, it is a part of you, it is you.

such as,When it's time to stop, you just don't want to stop, you just hesitate to do it. This reluctant part is also a part of you.It is not an external enemy, but in your flesh and blood. No matter how strong a man is, can he defeat himself?

That's why the ancients said that the unity of knowledge and practice is so difficult. That's the difficulty. Many people are lost in this long circuit for the rest of their lives.

3. The third realm of trading, which I call "ruthless."

Since emotions always disturb us, let's make ourselves ruthless.

At the beginning of the sunflower treasure book, it is said that if you want to practice divine skill and wield a knife from the palace, that is what it means.

Try not to involve emotions when making decisions.

For example, when stopping the loss, practice the ruthlessness of the moment when you lift the knife and fall.

In fact, this stage has entered the practice of "good mindfulness" as mentioned in the King Kong Sutra.

Only focus on the present and not be bothered by the successes or failures of past deals. You can be ruthless.

This stage is usually the beginning of making a profit.

4. The fourth realm of transaction, I call it "three good students".

This stage is characterized by discipline, especially discipline.

The ruthless stage shows that you still have emotions, but try hard and forcibly block your emotions out of the door.

But when you simply enforce trading discipline, things get easier.

You will get into the habit of making trading plans for the next day after the close of the day. The next day, no matter what happens, you will follow this plan. No matter what the price you have to pay, you will gladly act according to discipline.

For example, your trading plan yesterday stated that if a stock fell to 5.38 yuan, you would stop the loss. As a result, the lowest intraday price today dropped to 5.38 yuan, and you stopped your loss as planned. Then the share price rose all the way, closing at 5.8 yuan.

In terms of the results of the transaction, today's operation was very bad. But in terms of the trading process, your execution of the trading plan is perfect. At this stage, you begin to know how to separate the trading results from the trading process. This is a very important step.

The right trading process is 100 times more important than the correct outcome of a given transaction. Because the results of certain trades are correct, they are short-term, and have little impact on your investment career in the long run. The correct trading process proves that you have formed good habits, which is an important thing that will last a long time and stay with you for the rest of your life.

In fact, the most terrible thing is that you use the wrong process to win the right result.

For example, in the previous example, the plan stated a stop loss of 5.38 yuan, but after the price arrived, you hesitated to implement it, and as a result, the price went up later.

On the face of it, you are profitable, but this is the most dangerous place. Because you got a "reward" for violating the trading plan. So next time you will further violate the trading plan.

The dike of thousands of miles will be destroyed by the ant nest, and eventually your entire trading system will collapse.

5. The fifth realm of trading, which I call "internalization."

You don't even have to write trading plans every day (for 99.99% of people, the headmaster still strongly advises you to do so).

Because of all the discipline and iron enforcement, these things have been internalized.

For example, a skilled driver has internalized when to step on the accelerator and when to brake.

You have formed a trading system in your heart, and you subconsciously execute transactions in strict accordance with this system. At this time, you are already a quantitative trader. Or semi-quantitative traders.

In fact, many experts in subjective transactions are in this realm.

6. The sixth realm of trading, which I call "doing nothing and doing something".

When your system has been formed, you find that you don't even have to look at the disk.

You can write your trading strategy into computer code and let the computer help you watch the order and execute the order.

As a monitor, you just have to take a look at it once in a while.

At this stage, you find that the less you do, the more you earn. Because your inaction is a prerequisite to ensure the power of the system. Once you do too much and interfere too much in the system, it will have a negative effect.

At this stage, you need to control your desire to interfere with the system subjectively.

7. The seventh realm of trading, I call it a "mathematician."

Coming here means that you have your own strategy, model, and practice for quantitative trading.

As a quantitative trader, the first and most important step is to make a beautiful return test of the capital curve.

When you have a strategic idea, you need to write it into computer code, and then what? It is not to start the firm offer immediately, but to put it back into the real historical market data.

For example, you think of a strategy to buy when the 5-day moving average is above the 20-day moving average and sell when the 5-day moving average is below the 20-day moving average. You write the computer code, and then you do a historical review of the five-year daily line data of the Shanghai Composite Index from 2010 to 2015 to see if this strategy can make money. It turns out that the effect is not as good as you think.

And then you'll start doing something called parameter optimization.

Since the effect of the 5-day moving average and the 20-day moving average is not good enough, how about changing to the 10-day moving average and the 30-day moving average?

You will find that there are a lot of parameters to choose from. At this time, the benefits of the computer come out, it can help you complete a large number of calculations and find the optimal solution in a large number of parameters. This process is mathematically called fitting.

In essence, it is to find out the parameters that can best adapt to the historical market through a large number of calculations. Then you can get some beautiful simulated capital curves.

This process is the only way for all quantitative traders, and it is also a very important stage.

Because the better you can fit the historical market, the more beautiful the capital curve, which shows that your basic skills are very solid and that you have a very deep understanding of the market. It shows that you have the ability to optimize the combination of various technical indicators.

These abilities are very valuable.

8. The eighth realm of trading, which I call "trying not to be a good tailor."

In the previous stage of the fitting process, you may use a large number of filters, a large number of conditions, etc., to make the strategy perform well enough in the historical market.

But suddenly one day you find a problem, the more parameters of the strategy are used, the less adaptive the strategy may be to the future market.

It's like a tailor making clothes. According to your current figure, he carefully measured a lot of data, and then made a very fit clothes, you wear very beautiful. But the problem is that clothes that fit better at the moment mean that the less adaptable you are to possible body changes in the future. If you suddenly get fat or thin in the future, you won't be able to wear this dress.

The future of the stock market is uncertain, and the stock is likely to get fat or thin one day. If you make a dress that fits you too well, the less adaptable it will be to the future.

When you realize this, you enter a new stage, which I call subtraction. You'd rather your clothes don't look so fit and look so good at the moment. You need to make it more adaptable to future changes. This process is very painful.

Imagine how painful it is for a good tailor to take the initiative to make his own clothes that don't fit so well.

Similarly, one of your strategies, can run in the history of the market is very beautiful, stable returns, back test a very small capital curve. At this time, you have to do subtraction, which may make the capital curve potholed and less beautiful.

When you get to this level, you will understand the pain.

9. The ninth realm of the transaction, I call it "the main road to Jane."

"the only way to choose is disrelish and choose". This sentence comes from the "inscription of confidence" of the three ancestors of Zen Buddhism. I like this sentence very much.

When you have tried thousands of ways, pretended to be numerous sophisticated forces, and used countless Nobel equations, you finally find that the world is actually simple.

It is simple and simple that can maintain long-term effectiveness in the long river of time.

Please realize this slowly.

Let's review the nine realms of the transaction again.

The first realm of transaction: sponge

The second realm of transaction: the lost

The third realm of transaction: ruthlessness

The fourth realm of transaction: three good students

The fifth realm of transaction: internalization

The sixth realm of transaction: doing nothing is better than doing something.

The seventh realm of trading: mathematicians

The eighth realm of trading: try not to be a good tailor

The ninth realm of transaction: from avenue to simplicity

When you see this, you must feel that the road to trading is really not easy. It's like crossing a log bridge with thousands of troops.

Some trading masters finally came out after several bankruptcies and ups and downs before they finally realized it.

In which the taste, cold and warm self-knowledge.