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Dialogue with experts; how to get through the trading bottleneck?

2024-04-10

Graduated from Shandong University with a major in Computer Science, 6 years of full-time trading, 8 years of part-time trading, and 10 years as a game development programmer. Pure manual trading, not looking at technical indicators, relying on the sense of the market and naked K lines for adding and reducing positions, good at entering on the left side, will add positions against the trend, does not set stop losses and will hold positions, manages risk through position control, has managed up to over a million US dollars in funds, and currently can achieve an annualized return of around 100%.

1. Teacher: Hello! I read about your "Talented Person Interview" where you turned 1,000 US dollars into 800,000 US dollars, which is indeed very impressive. I would like to know, what do you think is the most core factor for you to achieve such trading results?

Falling from the sky: The most core factor, I think, is the love for trading. Without the love for trading, it would be impossible to persist through the continuous losses and margin calls along the way, and I would definitely give up halfway. Without the love for trading, the passion for analyzing K lines, it would not be possible to sit in front of the computer for a long time to watch the market. Without love, you can't sit still.

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I have also introduced that I studied computer science and was a software engineer, and I have been a game development programmer for ten years. The reason why I became a game development programmer is also because of my love for games. I have always been very fond of playing games since high school and university, so after graduation, I was determined to do it.

In order to work in the game industry, I have also given up a very stable, easy, and financially monopolistic job. Going to Beijing to do game development is very tiring, with a lot of overtime. Later, the reason for switching to trading is that trading for me is equivalent to another game, a higher level game than ordinary mobile and computer games.

Only by treating it as a game can I experience happiness from it, and continuously grow from this experience, and get through one hurdle after another. Trading for me is equivalent to a large-scale multiplayer online internet game on a server, where you compete with other players with real money, and fight monsters to upgrade.

Only by loving trading can you possibly achieve some eye-catching results in trading. Love it, and you are willing to give up something for it. Only by giving up can you grow, and it is possible to reach the pinnacle in a certain field.

2. You said you have been trading for 14 years, and you have encountered a bottleneck period, and I seem to have encountered it now. It's not going well, constantly losing money and margin calls, and I have been disheartened at one point. As an experienced person, can you share with us why you encounter this bottleneck period? How to get through the trading bottleneck period?Iron Cakes Falling from the Sky: I believe that people in all walks of life will encounter bottlenecks in learning and development, and only a very few geniuses may achieve success in certain fields without encountering bottlenecks. I think the reason for this is that when you first enter a field, you don't have enough knowledge, information, or skills in that field, so you don't know what problems you will encounter and what awaits you ahead. When you have been in this field for a long time and have been exposed to more and more things, accumulated more and more knowledge and experience, you will realize that there will be a bottleneck period. Having a bottleneck period indicates that you have been struggling in this field for a while and know what problems it will have.

As for how to get through the bottleneck period in trading, this requires specific analysis of specific issues. There may be many bottlenecks in trading, such as technical analysis, capital management, and mentality. If you don't solve each bottleneck, you cannot achieve success, so this bottleneck may require you to spend a long time and have enough patience and confidence to overcome it.

I think it is not easy to have enough patience, confidence, and time and energy to get through it, including myself, I haven't done it. After encountering the bottleneck period in the foreign exchange market, I left the foreign exchange market for a long time. Although I left the high leverage of the foreign exchange market, I was still struggling in the stock market.

In the end, it was the love for trading that made me re-invest funds into the foreign exchange market. Perhaps the experience accumulated in the stock market over the past one or two years, the accumulation of technical analysis, position management, and mentality tempering, naturally and unconsciously got through this bottleneck period, and then after the beginning of 2016, I was able to make a stable profit in the foreign exchange market.

So how to get through the trading bottleneck period? I think it is still based on love, and then you need to maintain a close but distant relationship with high-leverage trading. You need to reconcile with it, don't go against it, give up the idea of achieving how much profit and defeating the market, and maintain a relatively peaceful mentality.

For me, it is to give up the state of making a profit and return to the original state of trading. It is enough to experience happiness in trading. You keep experiencing happiness in trading, and unconsciously accumulate some experience, adjust your mentality, and then you just wait for that point to come.

3. Teacher, you said in the article: "Controlling risk through position management is more effective." Can you introduce your risk control concept and operational points in detail?

Iron Cakes Falling from the Sky: My operational points are to enter against the trend, carry orders, and not set a stop loss. It sounds like it goes against some common theories on the market, such as following the trend and setting a stop loss, but it is related to my own system, personality, and experience, and may not be suitable for other friends.

When I make a trade, as long as the leverage is sufficient and the spread cost is not too high, I can do it. Then find a relatively safe position to enter, even if you enter against the trend on the left side, you also need to find a relatively safe position to enter and start building positions gradually. I won't start with a very heavy position, and the position is adjusted by continuously adding and reducing according to its trend.

So the initial position will be relatively light, controlling risk through position management means that you adjust the position size based on the trend of the market, continuously adding and reducing positions to keep the position at a reasonable size. Because I trade based on my sense of the market, I can't really say what the specific points are, because it's a feeling. When you feel it's time to add a position, then add it, and when you feel it's time to reduce a position, then reduce it.When you feel it's time to enter the market, if in terms of capital management, you think the current position is not too heavy, you can open more orders. If you feel it's a bit heavy, you can open fewer orders or exit earlier, taking a smaller profit.

So, the position is determined by your market sense and your mentality. If your market sense is not good, you should have a lighter position. If you feel the pressure is a bit high, you should also have a lighter position, and you can take a smaller profit and exit. When entering the market, be a bit lighter in your actions and choose a more cautious position. It is impossible to accurately grasp the lowest and highest points. As long as you adjust your mentality and grasp the part of the profit you should get, it is enough.

4. Your definition of trading is: happily watching the market and happily placing orders. You say you are a pure manual trader, do not use EA, and do not look at indicators, only look at naked K-lines. This indeed requires solid skills. Can you briefly share one or two reliable naked K-line trading strategies?

Falling Iron Cake from the Sky: I generally do not look at indicators such as MACD or moving averages when trading, but I will look at the trend. However, I do not draw trend lines because there is no need to draw them, as the trend is clearly there. I will not count any waves, but I will feel its fluctuations and sense the market's rhythm. Through the trend, fluctuations, and some K-line patterns, I choose some entry points.

I will also look at support and resistance, but I do not take this as the standard. Nothing is 100% reliable, and there is a certain probability. If it's reliable, you can consider the support area and resistance area, choose these positions to gradually build positions, add positions, and reduce positions. You can consider some extreme cases of fluctuations to add or reduce positions; you can consider the trend, feel the trend, and do some adding or reducing when it reaches the limit.

These strategies are only a part of trading. Having only this alone cannot guarantee profits. It must be combined with your position management and adjusted with your mentality. Only when these are organically combined can a stable profit system be formed. The same market, the same strategy, different people with different position management and mentality will produce different results. So, I think it is impossible to achieve stable profits through one or two strategies.

You also need to find a position management method suitable for your strategy, and you need to temper your mentality to make it suitable for your strategy and position management. Only when these three are unified can stable profits be achieved.

Tempering the mentality cannot be copied. You can only step by step, temper yourself, go through these difficulties, and step over these pitfalls, and your mentality can be tempered. Only by experiencing and feeling it yourself can it become a part of you and form your own system.