A friend who has been trading for 10 years shared with us how to conduct transactions. What he said was actually similar to what I had learned before, but it gave me a shiver and brought about a qualitative change in my thoughts and concepts. His trading strategy is very simple, but in fact, it is very difficult for the vast majority of people.

The great way is simple, but it is not easy to understand and practice this sentence.

Friend's summary:

1. My most important job is not to analyze the fundamentals, because the so-called fundamental information is N-hand information, and everyone can get it, the value is limited.

My most important job is to do fund management and risk control, because ensuring the safety of the principal is the primary goal, because the leverage is high, the risk is great; the second is to study the market trend (to put it bluntly, it is K-line, trading volume, etc.), because only the market is right (this is also what Livermore said most often), news, policies, fundamentals, etc. will be reflected in the trend (remember the frost a while ago, it was a good news and policy, if you rush into the market according to this news, you are finished, because the market trend is the opposite).2. More than 80% of my time in a year is spent with an empty position.

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3. I never go full position (this is somewhat different from stocks because the risk in forex is high). There are many champions of simulation contests, but after 10 years, the outcomes for these people are not very good. I can never be a champion because my positions rarely exceed 30%. Champions in simulation contests, because they are all simulated, operate with full positions, and the champion is won by gambling. This sense of pleasure will lead these people into a misconception, a misconception of pursuing high returns. A few years ago, I had a client who made hundreds of millions from futures, but lost everything in one impulsive act and almost jumped off a building. Originally, if he had closed his position in time, he could have had over 10 million, living a worry-free life, but he was no longer calm, continuously adding margin, and lost everything. The gap between hundreds of millions and 10 million is too great.

4. My annual compound return target is 30%-100%. Generally, after reaching 70% in the second half of the year, I will take a vacation and travel, because doing too much is prone to mistakes.

5. There are three types of trends: rising, falling, and oscillating. I only do falling, which is what I am best at, and I only do what I am best at. Because rising requires a lot of factors to support, and it often takes a long time to complete, but falling often has no reason and is completed in a very short time.

6. When I choose to enter, I want to ensure that the input and return ratio is greater than 1:9, that is to say, if there is a possibility of losing 1000 yuan, there must be a possibility of making 9000 yuan under the same conditions. How can I ensure such a high return ratio? That is to do the most certain opportunities. What is the most certain opportunity? Simply put, it is when the trend is established, and I have drawn a chart to analyze (using the 60-minute line of the Shanghai Composite Index as an example).a. Common top patterns in candlestick charts include double tops and head and shoulders tops. The Shanghai Composite Index does not resemble these patterns due to the sharp decline caused by the stock market crash. However, it somewhat resembles a head and shoulders top. By connecting the low points of the two shoulders, a straight line is formed. When the candlestick chart effectively breaks down through this line (closing below the line for two consecutive days or closing more than three points below the line), it becomes their entry point. See the circled area above, which is where the trend is confirmed and is also a position with a higher degree of certainty for establishing positions.

b. The blue square area in the chart represents the holding period. Note that there is actually room for further decline below the blue area, but they have already closed their positions. This is when the decline is the most intense and also the easiest time to close positions. The holding period does not exceed two weeks.

c. With the same approach, after the rebound on July 9th, a wave of increase was formed. Starting from last Friday, a new round of decline began, but they will not enter the market on last Friday, as there is a lot of uncertainty. The current result is a significant drop, but the market also has a high possibility of taking another route. However, we connect the low point of the 9th and the low point of the 28th to form a straight line. If the candlestick chart effectively breaks below this line next (pay attention to the definition of "effective," the corresponding point on the line is 3600 points), then the opportunity to establish positions will come.

Does it seem like a lot of profit has been lost? But the reality is, he has been doing this for 10 years, with a compound annual growth rate of 30%-100%. On an annual basis, it is not high, but there has never been a year when he has lost money.Reflexivity Theory

This friend also explained the reflexivity theory to me, saying it is actually quite simple yet the most important, forming the basic logic of the stock market.

Economics tells us that prices fluctuate around value, which looks more or less like the diagram above.

Warren Buffett has a famous saying: "I am fearful when others are greedy, and I am greedy when others are fearful." For example, when the market was at 5,000 points in June, everyone was excited, imagining the 5,000 point mark. At this time, Buffett was fearful, not necessarily selling stocks, but definitely not buying; another example is in September 2008, when the A-shares plummeted again and again, people were already fearful and desperate. At this time, Buffett bought BYD, and at this moment, Buffett was excited.In fact, as Old Ba himself said, he did buy when the stocks were undervalued, and at that time, undervalued stocks were everywhere, and it would be hard to make a wrong choice. Of course, to achieve what Old Ba did, there must be a prerequisite: your investment should not affect your life and can be held for several years, which is actually what most retail investors can't do. This is actually the advantage of the wealthy, which ensures a good mentality, and this mentality will bring returns.

Uncle Gen always attacks Old Ba, and I think if Uncle Gen had to manage tens of billions of funds, his mindset would change. Just as my friend who does futures said, he said that what I care about most is the safety of the funds in each position, and then how much money can be made. Old Ba said he doesn't understand high-tech, so he doesn't invest in these companies, and thus missed the high growth of these companies. We don't talk about Old Ba's problem of not keeping up with the times and not loving to learn, Old Ba chooses to invest in industries and companies that he can understand, which is actually the most correct thing to do. The logic of his purchase of Coca-Cola at that time was still very impressive.

Soros has a bad reputation because he mainly short-sells. He is the exact opposite of Buffett, as he enters the market to sell when the stocks are overvalued.

Rising requires many factors, but falling only needs one factor, that is, the stock is seriously overvalued.

So, Soros has a bad reputation, which is normal, because when he enters the market to sell, it is the least resistant of the three modes of stock operation, and he can make a lot of money in a short time. The money that Old Ba needs to earn for several years, he can get it done in a few months.Underestimation and overestimation are certainly dynamic concepts. For example, midway through a bull market, in absolute terms, most stocks have already been overvalued, but the enthusiasm for buying remains strong, with funds continuously pouring in. In relative terms, most stocks are undervalued.

The qualitative change in my thoughts:

1. If one day, I approach the market with a relaxed mindset (not afraid of missing out), using the simplest method (only taking opportunities that confirm the trend), and making money easily (not the most but secure), I would consider myself successful. I have already felt a qualitative change in my mindset, and now I need to verify in practice whether my mindset has truly changed.

2. Set the profit target at a reasonable position to ensure a high certainty of making money after entering the market. If there is no confidence, do not enter.

3. Do not use any news as a basis for decision-making, only make decisions based on the market trend. (In other words, lean more towards technical analysis).4. Enforce a long period of holding no positions, only engaging in opportunities with high certainty.

5. Prioritize capital management as the foremost, technical analysis as the second, and fundamental analysis as the third. That is, first ensure the safety of the principal, ensuring that most positions can make a profit (stop losses for those that start at a loss); secondly, identify entry and exit points, as well as points for adding or reducing positions through technical analysis; and lastly, study the fundamentals.