Friday, July 10, 2015

After the rebound, is it to go or stay?

How to embark on the path of freedom to the kingdom of the stock market

The Shanghai Composite rose 168.47, or 4.54%

Heavy 100 daily limit, up 2.32 yuan per share.

Huaguang shares rose by 1.26 yuan per share.

The bottom position of China National Heavy Duty Truck rose by 1.74 yuan per share.

After the stock market has risen continuously, friends in the stock group have speculated about what kind of adjustment will be made next week, and will it be a storm that will sweep everything?

Previously, a good friend recommended me to read "The Road to Freedom to the Kingdom of Finance" because the author of the book, Mr. Sapp, is internationally recognized as the number one master in the psychology of trading.

At first, I was obsessed with my own small victory, and although I had heard of the name of the book for a long time, I always refused to read it because it was obscure and not suitable for the Chinese stock market. After this painful lesson, let me read quietly.

Many of the ideas in the book subverted my imagination.

The book mentions that among short-term traders, about 40 percent of the successful people in mature markets are fighting, that is, six out of ten people lose money in stock trading, and it is not surprising that nine out of ten people lose money in the Chinese stock market.

There are three factors that determine the success of stock trading: psychological state; money management; Stock trading technology system. Their proportions are 60%, 30%, and 10% respectively.

This shocked me again, in my world, for so many years, I have been looking for a personal profit system that is sure to win, but the system I am pursuing only accounts for 10% of the success factor. I was blown away by this discovery.

So, is the book correct?

Through this stock market crash, although my stock trading technical system is flawed, it is still very strictly implemented.

However, there is a big problem in money management, according to the book's point of view, when the number of stocks in the profitable state is large, when it falls, the number of shares held in the process of losing money is small, and the number of stocks that lose money in the process of falling is kept to a minimum.

In the current June stock market crash, my operation process was the opposite. Therefore, after summing up the lessons of this failure, I came to the lesson of "heavy positions to rise, light positions to survive down", if there is no June stock market crash, even if I realize the importance of capital management, but I will not pay attention to it as my future trading discipline.

In this June stock market crash, the first half was a problem with capital control, and in the second half, when Chongbai went from making money to losing money, there was a serious problem in his psychological state. As a result, chasing up and down, trapping at a high level, and suffering heavy losses. The problem of mentality is the core element throughout the entire stock trading process, and the psychological state determines the orderly management of funds and the good performance of the trading technology system.

Some good friends sold for hundreds on July 8. This is understandable, not to say that it was sold wrong on this day, because on the same day, I don't know if there will be such a huge increase the next day, the market will reverse yesterday, and the atmosphere on July 8 is too terrifying. However, these friends ignored the fund management, because on July 9, many stocks had the opportunity to enter, but because of the poor response to the fund management, the mentality was unbalanced, and eventually the technology could not be used.

For Monday, although the market rises and thousands of shares continue to rise and fall, it cannot be used to guide operations.

What if Monday returns to the June crash, or a few days after the rally, it returns to the June crash. If this extreme situation is repeated, how should you manage your account funds then?

With this idea, you can make a good plan for the weekend, what to do if you encounter extreme situations, and if there are no extreme situations, continue to deduce what to do today's general limit, with this plan. Don't worry so much. There is no need to guess how the market will go in the future, through the stock market crash in June, I have learned a profound lesson: the trend of the market outlook must not be guessed, and you will only be cocooned.

Under the premise of this thinking, we can conceive coping strategies in three situations: very bad, average, and very good. At that time, there will be no rush. Once a coping strategy is formulated, it must be resolutely implemented, and it cannot be indecisive and self-denial, which is also an important premise of psychological management.

Scatter, whistle freely, forget all about yesterday, and easily embark on the road to freedom on the road to the kingdom of the stock market.

On July 9, 2015, the total capital of 100,000 simulated disks was 115,281.66 yuan.