The legendary woman who was reborn from the ashes

Chapter 78 Trading Profits Start with Ruthlessness

In Jiang Juan's investment career, the most critical change is undoubtedly the way of thinking, the leap from subjective trading to quantitative trading. Recently, Jiang Juan has received inquiries from many friends, all of whom asked if they could learn more about Jiang Juan's insights into trading.

Let us all follow Jiang Juan and enter the mysterious world of trading in her mind.

Jiang Juan vividly calls the first level of trading the "sponge level". At this stage, investors are like a dry sponge, madly absorbing various trading theories, knowledge and wisdom.

Whether it is the ancient Dow Theory or the mysterious Gann Theory, from the complicated K-line chart to the tortuous curve chart, from the sophisticated financial analysis to the profound industrial theory, from the general trend of the macro economy to the subtle trading psychology, they learn everything and read everything.

This is a necessary stage for every investor on their growth path, just like before building a tall building, you must first lay a solid foundation. The more solid the foundation, the taller the future building will be.

But the key is that absorption is only the first step. The more difficult part is how to separate the essential from the dross, and how to digest and integrate the knowledge learned.

Unfortunately, many investors stop here, satisfied with the possession of knowledge, but unable to truly convert it into stable profits. They are still a long way from real success, as if they need a somersault cloud like Sun Wukong to fly over 108,000 miles.

Jiang Juan calls the second level of trading the "Lost Realm".

At this stage, investors often fall into deep confusion and bewilderment. They may have understood many trading principles, but why is it so difficult to make a profit in actual operations?

This is because the human physiological system is complex and subtle, and there is a tortuous circuit between understanding a truth and actually putting it into practice.

This path is full of various interferences and destructive factors, just like the Red Army's 25,000-mile Long March, which was full of difficulties and obstacles. From understanding to execution, the process is not much easier than the Long March.

What is even more difficult is that investors will encounter a powerful enemy on this road - their emotions. Emotions such as greed and fear are like strong winds and huge waves, which may overturn investors from their stable course at any time.

Emotions are far more powerful than reason and are as hard to tame as wild beasts. What’s worse is that emotions are closely related to investors. They are part of investors and are an inherent force that cannot be separated.

This is like fighting with your own shadow, which is difficult and painful. Therefore, in this lost state, investors need to learn how to harness their emotions and turn them into a force that propels them forward, rather than a stumbling block that hinders their progress.

In this complex trading world, stop loss often becomes a difficult hurdle to overcome. When it is time to cut a position decisively, many people always take chances and hesitate to make a move, and the hesitation cuts their decisiveness like a knife.

This reluctance is actually an inseparable part of human nature. It is deeply rooted in our flesh and blood, becoming the most difficult "internal enemy" to fight against.

Looking back at the heroes in history who were feared by all, although they were able to defeat external enemies, what they found truly difficult to defeat was often themselves.

This is why the ancients often said that the unity of knowledge and action is the highest level of spiritual practice, but it is also the most difficult level to achieve. Many people lose their way on this long road of spiritual practice, and spend their entire lives searching for the critical point that can help them overcome themselves.

Jiang Juan calls the third level of trading "cold-hearted swordsmanship". In the world of trading, emotions are like poison that corrode our decision-making. Therefore, we need to cultivate a calm and ruthless heart, just like the masters in the world of martial arts, who slash emotions with swords and are not bound by any emotions.

As the opening chapter of the Sunflower Manual states, if you want to practice divine skills, you must first castrate yourself, which means that you must give up something before you can achieve great success. The same is true in trading. If you want to achieve extraordinary results, you must abandon all emotional interference when making decisions. Especially when it comes to stop loss, we need to practice the kind of decisiveness that is ruthless and ruthless.

In fact, this stage has already entered the door of the practice of "good mindfulness" in the Diamond Sutra. We are no longer troubled by the success or failure of past transactions, but focus on every decision at the moment. Only by doing this can we truly be "cold-hearted".

When traders reach this level, it often heralds the beginning of the road to profit.

The fourth level of trading is what Jiang Juan calls "discipline first." At this stage, traders have learned to strictly abide by trading discipline and are no longer swayed by emotions.

Although we have tried to keep emotions out of our mind during the "cold and sword-hearted" stage, we still have our moments of emotional fluctuation. However, in the "discipline first" stage, everything becomes simple and clear. We will develop the habit of making and strictly following a trading plan, laying the foundation for our trading journey every day.

Suppose you wrote in your trading plan that if the stock price drops to your stop loss price, you will stop loss immediately. During the day, the stock price really dropped to this level, and you executed the stop loss operation according to the plan without hesitation.

However, unexpectedly, the price then rebounded all the way up. On the surface, this stop loss operation does not seem to be wise. But from the perspective of the trading process, you have perfectly executed your trading plan, which is a victory in itself.

At this stage, you begin to understand the difference between trading results and trading processes, and learn to treat the two separately. This is an important step towards successful trading.

Because the correct trading process is far more important than a correct trading result. A few trading results may be obtained by luck, but long-term stable profits are inseparable from a solid trading process and strict trading discipline.

In the world of investment, short-term gains and losses are often fleeting, and they are actually just insignificant fragments in your long investment career. What is really worth pursuing are the good habits that are gradually formed in the trading process. They are the precious wealth that can accompany us through the ups and downs and witness our growth.

Jiang Juan once experienced such a scene: in a carefully formulated trading plan, it was clearly set that when the price reached the stop loss point, it should be strictly executed. However, when this moment really came, she failed to execute decisively because of her inner hesitation and greed.

As a result, the price unexpectedly rebounded, and it seemed that you had made a profit on the surface, but the hidden danger behind it was as terrible as a time bomb. Because the "reward" you got by violating the trading plan was actually eroding your trading discipline imperceptibly.

In future transactions, you may challenge the rules more unscrupulously until one day, your entire trading system collapses because of this little indulgence.

On the road of trading, there is a state that Jiang Juan calls "internalization". In this state, you no longer need to mechanically write a trading plan every day, because all the discipline and execution have been deeply imprinted in your heart.

Just like an experienced driver, you can accurately judge when to accelerate and when to brake without thinking too much. A complete trading system has been formed in your mind. Every transaction follows the rules of this system, and every decision is a natural reaction of this system.

When trading enters the realm of "inaction is better than action", you will find that you can even stay away from the hustle and bustle of the market, turning your trading strategies into computer codes, and letting the machine watch the market and execute orders on your behalf.

You become a monitor who is detached from the market. You only need to take a look at the market occasionally to grasp the overall situation. At this time, you will find that the less you do, the more you earn.

Because your non-intervention is the premise for the system to achieve maximum effectiveness. When you start to interfere too much in the operation of the system, it may break its original balance and produce negative effects.

Jiang Juan calls the highest realm of trading "mathematician". Here, you are no longer a simple trader, but a wise man who uses mathematical principles to analyze the market.

You use mathematical tools such as probability and statistics to build and optimize your trading system, convert market fluctuations into a series of cold numbers, and then find out the hidden patterns through precise calculations.

Each of your decisions is based on rigorous mathematical analysis, and each of your transactions is a precise attack on the market. In this realm, you are not only a trader, but also a mathematician who controls the market.

During her trading journey, Jiang Juan has tried various methods, pursuing seemingly advanced techniques and strategies, and even attempted to use Nobel-level complex equations to interpret every fluctuation in the market.

However, after countless attempts and failures, Jiang Juan gradually realized a simple truth: the world is actually much simpler than we imagined.

Those truths that can stand the test of time and remain effective are often those plain and simple ones.

Just like the sun rises in the east and sets in the west every day, and the four seasons cycle endlessly, these natural laws are simple but contain endless wisdom. The same is true for trading. Only by abandoning complexity and returning to simplicity can we see the essence of the market and find the path to success.

Looking back at the realm of trading, it is not difficult to find that every trading master who finally stood out has experienced countless hardships and setbacks. They may have wandered on the edge of bankruptcy, or suffered from the ups and downs of life. It is these hardships that finally made them realize the truth of "the great way is simple".

They know the ups and downs of trading and have tasted the ups and downs of trading. It is these experiences that make their trading path more solid and also allow later generations to learn from them.

Therefore, let us always keep a simple and pure heart on the road of trading, not be confused by the complicated appearances, not be shaken by short-term fluctuations. Truly understand the essence of "the great way is simple", break through the waves in the ocean of trading, and finally reach the other side of success.

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