The growth of foreign exchange investment mentality7Stages

The growth of investment mindset mentioned below7The "one stage" is only a psychological obstacle caused by technical problems in establishing systematic trading methods. In practical operation, the closer to the foreign exchange market, the more influenced various other factors will be, such as market atmosphere, the entry and exit of large speculative funds, news volatility, and the tug of war in the operation of the situation. All of these may make a trader unable to bear psychological pressure and give up using a researched system. Therefore, if they can maintain a vague and aloof attitude during operation, paying more attention to the system and less attention to the market, it will be conducive to the stability of their mentality.


Now let's take a detailed look at the growth of investment mentality7Stages:


1At the beginning of the transaction, I was worried that I would lose money after placing this order.
Countermeasure: Set a stop loss, with each transaction losing up to% of the total funds5%Withdraw and resolutely execute.


2With a stop loss, you don't have to worry about losing money, but what you're worried about is not being able to make a profit. Moreover, with consecutive stop losses of seven or eight times, you have already lost a large portion of your capital. Seeing only stop losses but not profits is the most worrying thing at this time.
Countermeasure: Increase the success rate of operations and search for critical turning points for fluctuations, which are entry points where the maximum fluctuation is likely to follow the current trend for a period of time. (This is the core of all technical analysis, and everyone's methods are different. Being able to find the critical turning point in six out of ten rounds is already considered quite successful.)


3By increasing the success rate, there is no need to worry about consecutive stop losses. You can start worrying about earning less when making money, especially missing out on the big market trend. The price difference between the two ends of a stop loss and the spread between the two ends of a stop loss is higher than the theoretical calculation. Therefore, if the profit is not enough to make up for the loss when winning, or if the profit is small, it is uncertain whether it can be profitable in the long run.
Countermeasure: Try to expand profits when making a profit. If you can capture big fluctuations, then even a small stop loss won't hurt a few hairs.


4Learn to wait and successfully catch some big fluctuations. Don't be afraid to earn less when you make money, but at the same time, there are also more trades that turn from winning to losing due to waiting. These loss making transactions not only affect mood, but also waste time and energy, and have a significant negative impact on the overall trading performance.
Countermeasure: Use the motto of "never let profits turn into losses" and close the position when the profit position falls back near the cost price.


5Okay, there are fewer trades that have been lost, but there are also more missed big moves due to tying out. Overall, it seems better to use stop losses to take advantage of those missed big moves.
Countermeasure: Abandon the motto of "never turning profits into losses" and instead use stop losses to expand volatility. Further research will be conducted to improve the placement of stop loss points, while identifying some conditions that can continue to wait while shifting from profitability to falling below cost price. (Note: With more conditions, the system becomes unreliable, there is a trade-off issue)


6Most of the specific problems have been solved, and the next concern is to what extent and for how long your method will work?
Countermeasure: Implement the system on the historical graph of the past decade through simulation experiments to verify modifications, and use the system in the future to do so50More than one transaction can achieve a stable execution system without market interference.


7The system can now execute stably, and the overall transaction result is statistically positive. At this point, there is no concern about the outcome of a single transaction, but rather the confidence to win as a whole. But there are still new issues, and the concern is that once a certain nature of the market changes (such as cyclical changes or changes in government financial policies), it will cause a change in currency attributes and suddenly render the system ineffective.
Countermeasure: There are no countermeasures at this point. The foreign exchange market is a place of eternal change, and there is no way to achieve long-term success. Especially, technical analysis is a follow-up operation. The only thing that can be done is to maintain a respectful attitude towards the market, check the operation of the system at any time, and when abnormal results occur in multiple transactions, it is necessary to establish new strategies after confirming that there are new special changes in the currency.