I am very much in favor of categorizing gambling and trading. There are many places where gambling and trading are connected. It is the closest game to trading.
The necessary and sufficient condition for the transaction to ensure the success of the transaction lies in the statistics and classification of the subject, and both are indispensable.
Statistics are to ensure that the transaction has a high probability of positive returns.
Classification is to guarantee what the subject can trade and what can not be traded.
What level of trading is taking place.
The market price trend is the accumulation of money. The price reflects the game results of the funds and information of all parties. The news will reflect the price trend regardless of whether the trader knows or not.
The capital market is a game of money, and money is the only one that can be trusted. The trajectory of money running in the market is the price trend.
The only valuable observation in the market is the price trend, and everything else is implemented in the price trend.
To figure this out, it is just getting started. Many people do not have the above entry conditions, they rush into the market, naturally, the loss is more than profit.
Once again, the profit and loss are in line with the normal distribution.
The subject of the capital market is actually waste paper. The only function is a certificate that allows you to legally convert a sum of money into another money after a certain period of time.
There is no other meaning beyond this. The purpose of trading is to make money.
Don't make a naive mistake like in the fable fairy tale, would rather believe that the size does not believe in their feet.
Don't believe in price movements but believe in what is called "value". There are so many people in the market that don't understand the truth.
It is natural to have a trading failure like this.
They are basically representatives of large probability of negative returns.
The only risk of trading is -
The money invested cannot be replaced with more money in the future, which is systemic risk. That is, the process of executing the sale cannot be fulfilled.
Besides this, all other risks are irrelevant.
So the trading risk is always there, every moment, the question is, are you doing a good job of rising, falling, and consolidating?
Have you papered enough for the black swan?
This is the key to trading.
For a real trader, what kind of trade is not important at all. As long as the market is volatile, any certificate can be turned into a negative cost for a long enough time.
Withdraw the principal. This is the purpose of the transaction.
Because this is a move to take the initiative to recover the cost, that is, the black swan will come and will not hurt you, because your cost has come back.
For successful traders, both ups and downs are opportunities to reduce costs. Not only do the capital efficiency increase, but the cost recovery speeds up. The target is that there is no need to choose. The only thing worth choosing is the target has a large volatility, which is unpredictable and impossible to predicted.
As long as the market is not a straight line, you can continue to play.
Many failed traders do not understand the truth, and regard contingency as inevitability and do not understand probabilistic thinking.
Successful traders are probabilistic thinking. Trading is to make probabilities. They believe that their trading system is a large probability of positive returns. They should respond to small probabilities, correct errors in time, and avoid tangling a reasonable loss of one or two orders.
(10% is within the bottom line of the safe stop loss range)
The key for the long-term stable benefits. It is must ensure the trader's trading method consistency.
About the 1% advantage winning rate, that is, the 51% win rate.
Under this probability, regardless of the amount of funds, divided into 1,000 bets, the vast majority of retail investors will win finally, and very few retail investors will badly liquidated. In fact, there is no need to divide into 1000 copies, 100 copies will be the same.
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Of course, if you often make a desperate shot(all in), then even if the winning percentage is 99.9%, when the number of plays is large enough that the results will be the same（badly liquidated）.
So no matter which casino, each bet has a maximum bet limit, such as a maximum of $20,000 per game.
Otherwise, if a big shot holds a billion dollar bet, even if the dealer wins 90% at this time, there is a 10% probability that the fool will win, and once the fool wins, the dealer will immediately broke.
So, the dealers won’t let this happen. they will control the size of each game to the extent that the probability can work.
There are two key points:
1, winning rate.
The amount of money is not a key point, and small funds can also be dispersed into many times of gambling. The key issue is that decentralization makes the probability work. If the big money is desperately all in all the time, it also will die very badly.
"People who have studied mathematics know that each time the probability of winning is an independent event," this sentence is correct, but it does not mean that you win 100 blocks and leave without hesitate, controlling greed can make people win.
After a number of independent events are counted, the probability is at work, and nothing to do with whether or not to hesitate or to continue fighting.
The length of time and the ability to control yourself withdrawal from the greed, these do not affect the probability, you cannot win the probability, no matter how you control yourself, as long as it has zero influence on the probability, you still cannot win, only when the probability let you win, and can be decentralized, that is the time you can win.
That is to say, early entry, quick withdrawal or control of greed, etc., unless it can affect the probability, it does not have any effect. So the key to winning is
Find a way to increase your probability, don’t waste time on the so called “controlling emotions.
Fortunately, for the stock market, the predecessors have done a lot of statistical work, and there are many methods with very high odds and theoretical explanations.
I will briefly introduce one or two:
Assuming that the stock market is completely random, the winning percentage is 50% under normal circumstances, but the actual winning rate is less than 50% due to the commission fee.
Considering a little more, that is dividends, the current dividend rate in the Chinese market has reached 3% (2014 average). Plus dividends, if it do not charge commission fees, in fact, our odds are far more than 50%. This is not a zero-sum game. The total amount of money in this game is constantly increasing. That is to say, in this game, if you don't gamble, you will buy the whole market, and the total amount of funds will continue to increase.
Why do retail investors always lose more money? Commission fee, or commission fee. Assume that the stock market has a commission fee plus tax of 0. 2%, once a week, 50 weeks a year, the fee reaches the funds 10% of the total amount, completely extinguished 3% of the dividends. At this time, the winning rate of retail investors is far less than 50%. Naturally, no matter how you control your emotions, you lose.
With this in mind, some people deliberately carried out statistics, randomly buying 10 stocks, holding 3 years, winning rate of more than 80%, holding 10 years, winning percentage of more than 90%. Buy 100 stocks at random, hold for 10 years, and winning rate more than 99%. And even if it is a bond, the winning percentage of this method is still very high. Doing it by this way, and to disperse, winning is a certain thing.
