Recently, the editor has summarized six rare investment trading experiences from the classic trading book "Market Wizards" by Jack D. Schwager, hoping to help everyone. The author, Jack Schwager, once interviewed 17 top Wall Street traders. Come and see how the investment masters solve trading problems!

1. The best remedy after encountering consecutive losses

Almost all traders have encountered consecutive losses, during which they could not keep up with the market rhythm and lost repeatedly. When you encounter consecutive losses, you must not redouble your efforts to try to save the game and turn the situation around.

When your trading is getting worse and worse, the best solution is usually to liquidate all positions (or protect your positions by setting stop losses), and then stop trading and take a break for a few days or a longer period.

If you stay in the market and continue trading at this time, you will not be able to maintain an objective attitude. Because each loss further erodes your self-confidence, so consecutive losses can make you have negative emotions, depressed will, and listless spirit. At this time, physical rest can eliminate all negative and adverse effects.

Advertisement

2. Good trades and bad trades

Traders have a common mistake, that is, judging the right and wrong of trading decisions based on the results of the trade. A good trade, that is, a trade with the correct trading decision, may also lose money; while a bad trade, that is, a trade with the wrong trading decision, may also make money.

A good trade, its process and the trading decision it follows can be profitable (at an acceptable level of risk). Although it may lose money in any single trade, it will eventually make a profit by continuously operating; a bad trade, its process and the trading decision it follows will lose money. Although it may make a profit in any single trade, it will eventually lose money by continuously operating.

For example, if you play slot machines, even if you win once, this is still a bad bet, which is unfavorable to you. If you keep playing, the probability of losing money will be very high.3. Correct Market Analysis, But Not Necessarily Profitable

Traders may have a correct analysis of the market, but they may make mistakes in specific operational aspects such as position establishment, position increasing, and position clearing, leading to the failure of the entire trade, and thus failing to profit from the correct market analysis. This is a quite common situation among traders.

To achieve success in trading, it is not enough to have the correct analysis; you must ensure that you can make money through the correct operations when the analysis is correct. Correct operations often make you feel uncomfortable and unsatisfactory. For example, if you want to go long, it is always more satisfactory when you enter the market after a price pullback during the rise. However, sometimes the market trend is very strong, and the price keeps rising, so you will never have the opportunity to go long when the price pulls back.

4. Do Not Strive for 100% Correctness

The market price moving in a direction unfavorable to the position is a common dilemma that traders often encounter. You should recognize that you don't have to make all-or-nothing, all-in-all-out trading decisions. You can clear part of the position, not all of it, and not all out.

It is easier to stop losses on part of the position than to clear all positions. It allows traders to take action on risks instead of waiting and delaying. If after partially clearing the position, the market price continues to move in a direction unfavorable to the position, then you repeat the same operation and continue to clear the position gradually.

5. Winners Have the Characteristic of Flexibility

Having flexibility and maintaining elasticity is a basic element of successful trading and one of the characteristics of trading winners.

Do not stick to ideas, and do not cling to views. If the market price trend is not consistent with the trading assumptions and expectations you have made, it is very important to take the initiative to admit mistakes and exit the market.If the analysis is incorrect or the situation changes, it is necessary to change the original viewpoint. Outstanding traders all have the flexibility to completely change their own views. They do not expect themselves to be always correct; they can re-evaluate everything to understand why the original viewpoint may be wrong. This ability to change flexibly is not only extremely important for the operational level of trading, but also crucial for the entire trading method.

6. Be cautious when everything goes smoothly

When your trading is smooth, everything is to your satisfaction, and meets your optimistic expectations, the most serious losses may suddenly follow.

Why might the most serious losses follow the best trading performance? One possible explanation is that when everything is going well and the trading is easy, traders are easily intoxicated by victory, blinded by temporary success, and thus generate a sense of complacency. Another related factor is that when your trading performance is at its best, it may also be the period when you dare to hold heavy positions and take high risks. Therefore, once the trading is wrong, the loss will be severe. Therefore, at any time, you still need to prevent and get rid of complacency, and be extra cautious and careful.