In the approach to algorithmic trading by investors, there are two extreme tendencies: one is to consider algorithmic trading insignificant, believing that the success of trading depends on subjective efforts in market judgment or even luck. The other extreme tendency is to regard the mastery of algorithmic trading methods as the most important factor, believing that with the right trading program, one can win decisively.

Both of these methods are biased and may lead investors to make fatal mistakes. Trading technology is like a weapon system on the battlefield. Of course, the better the weapon system, the higher the chances of winning. However, victory is the result of a combination of many factors. Therefore, the outcome of victory is often not the side with the best weapons, but the side that uses people, weapons, and the battlefield most appropriately.

There are several issues that need to be seriously considered in the understanding of trading technology:

Question one: What is the goal of investors participating in investment?

Although there are many different views on this question, they can be summarized into two categories: "getting rich" and "financial management."

If the goal is to achieve "getting rich," investors focus on the short-term appreciation of assets. Therefore, their focus is on individual trading opportunities and maximizing value. Trading technology has limited performance in achieving this goal.

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If the goal is to achieve "financial management," investors tend to value the process of asset appreciation. Therefore, their focus is on the stability of the entire asset appreciation process, and they pay attention to the overall performance of a large sample. Trading technology may be helpful in achieving this goal.

Question two: What is the investor's life choice for investment?If investment is considered as one of the options in life, investors have the following options: full-time or part-time, professional or non-professional. These four options can form four combinations: full-time and professional, full-time and non-professional, part-time and professional, part-time and non-professional.

The so-called full-time and part-time here are divided according to working hours. If the main working time is used for investment, it is considered full-time. If investment is done during non-working hours, it is considered part-time. The difference between professional and non-professional refers to the difference in professional ability. If one can make a living by investment ability, it is called professional; otherwise, it is non-professional.

Well, it is clear that the success of investment does not depend on the degree of occupation of working time, but mainly depends on the mastery of professional ability. The mastery of trading technology directly helps to improve the level of investment professionalism.

Question Three: "Scientific Type" and "Genius Type," which one do you belong to?

We must admit that there are geniuses in all walks of life. If you are not a genius, then taking the "scientific" investment path is a more successful professional road.

So, how to distinguish whether you are a "genius"? Anyone who thinks about this question is not a genius. Those who are not geniuses must strive for success through hard work. The study of programmed trading technology is an important part of the efforts made after birth.

Question Four: What is the most fundamental obstacle to the success of investment?

Human nature's weaknesses are the most basic obstacles to the success of investment. Human nature's weaknesses, especially the greed and fear in emotions, have been discussed in many articles on mentality that we have quantified and talked about on WeChat, so we won't go into details here. Therefore, whether one can restrain human nature's weaknesses is the key to the success of long-term investment.

Question Five: What is the fundamental purpose of mastering investment technology?Many people do not understand and think that mastering investment techniques is for "defeating the enemy and winning." In the eyes of many professional investors, this is a fundamental mistake. We master investment techniques not to defeat others, but to overcome ourselves. We develop a trading program, not to defeat opponents, but to restrain our own weaknesses.

Question Six: How to view the relationship between risk and return?

One of the confusing issues for investors when developing technology is how to view the relationship between risk and return. Many investors tend to maximize returns. The common practice of maximizing returns is to optimize the system. This is a harmful tendency.

Investment practice tells us that there are two principles in dealing with the relationship between risk and return: one is the principle of balancing risk and return, and the other is the principle of matching risk and return. That is to say, we should not pursue investment techniques that appear to have a very low risk level on the surface, and this method should usually arouse our vigilance. The investment techniques we choose must be adapted to our mental state.

Investment should not only be based on financial strength but also on mental strength.