What is the "20-Square Trading Method"? The master only teaches you cognition!

Guide

In the futures market, I estimate that less than 1% can make money for a long time, and some people say that it may be less than 5‰, because 90% of trader friends have not started, and there are roughly three reasons for not getting started, one is that the trading cognition is not enough, and the positive system cannot be formed. The second is the mismatch between money management and trading models. Third, the execution is insufficient.

The core point is that fundamentals cannot be combined with technology, but they must be combined with timing. That is, the general direction at the beginning, if the general direction is long, the fundamentals are also optimistic, I will always hold it, if it falls too much, I will make up for it.

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In the futures market, I estimate that less than 1% can make money for a long time, and some people say that it may be less than 5‰, because 90% of trader friends have not started, and there are roughly three reasons for not getting started:

One is that the trading cognition is not enough, and a positive system cannot be formed. The second is the mismatch between money management and trading models. Third, the execution is not enough, which everyone knows, but it is difficult to do.

Today, I would like to share the second point, which is based on my trading journey.

In the beginning, I was a pure technical analysis trader, and I studied many patterns, and my favorite thing was to draw charts, summarize the price patterns, review past trends, and summarize many methods.

At that time, it was a 10-year stock bull market that attracted me into the market, and I still remember that the concept of rare earths was very hot at that time, and the coal sector also flew up after the National Day.

I went to the library and read at least 20 books on stock trading, and I studied almost all the methods, what is the green dragon water absorption, crab eye shape, bowl bottom structure...... Thousands of drawings were drawn, notebooks were full of "passwords", and there were even requirements for the number of days at the bottom, not to mention the amplitude, and the persistence and seriousness of the time seemed ridiculous now, indeed too "metaphysical", and similar to the procedural concept of technical analysis.

In 11 and 12 years, the stock market was not good, and I went back to the original shape directly, and how much I earned was lost back based on my ability, so I began to study the macroeconomy and some industry knowledge, and I have not yet cut into fundamental analysis well. Because I was still obsessed with data research at that time, analyzing the macro and industry was still analyzing the data like looking at the K-line, but fortunately, I learned to judge the year-on-year comparison at that time, which was a bit of a superficial learning.

First, the three important cores

After doing futures, it also starts from technology, which has not been able to let go, and the process is omitted, and it is important to say something. Let's talk about why technical analysis always loses money.

1. Whether there is a general direction or not, whether it is accurate or not is not so important, because no one can accurately judge the direction. But the direction is a guide, which will not let you lose yourself, one will be more and one will be empty;

2. Is there a resonance system, why resonance, because a single variety can play how it wants, but in general it still respects the overall trend, I have suffered many losses, and then respected the whole;

3. Whether there is a profit or loss ratio is the most important. It determines whether you have to wait, whether you can hold it, and how well your money is not managed.

For example, I use technical methods to see whether the commodity index is upward, whether it is plate resonance, internal and external disk resonance, or fundamental resonance, and I choose rebar to go long. The sideways breakthrough has entered the market, because there is integrity and resonance, and the position is more confident, the problem is that once the floating loss is larger, people will panic.

Originally, there was no money in the account, so I did a job that couldn't rise, and I watched the iron ore and bifocal fly, slapped myself, and chose the wrong variety. Do you want to change the variety? The pattern hasn't gone bad yet, where is the stop loss? I didn't seem to think about it that much before, but now I'm completely overwhelmed.

Originally, I was looking at the breakout to make a breakthrough, and now I am looking at the breakout to make a pullback. Because a breakthrough is a signal, but intervention also depends on the profit and loss ratio. If I set a target price and a stop price, and the price has risen below the middle price of the two, and the profit and loss ratio is less than 1, then what else can I do? Sometimes I don't know how to set a target price, so taking a step is a step, do it first and then say, such a list, 300% is a loss, because there is no plan, my heart is unstable, and I always want to close the position.

Second, the profit cycle

I have been groping in technical analysis for at least 5 years, and I have been thinking about how to make money in technical analysis, in fact, it was only after I did the fundamentals that I realized that not only the problem of technical analysis, but also the fundamentals faced a problem that everyone overlooked: the profit cycle.

For example, as I just said, if you make more rebar and make money, you will continue to use this method, and if you lose money, you may think about what is wrong, whether to change the system, so do it 10 times? Do you want to change it?

When we flip a coin, the more times, the probability of heads is closer to 50%, and the same is true for trading, the more you trade, the smoother the profit curve, and finally your profit cycle can be presented.

For example, to do trend following, you may need to do 100 transactions to make the curve, in order to achieve a relatively profitable state, if only 2 varieties, then the profit cycle may be one year, not to mention that you can stick to this method (under normal circumstances, if you don't make money for a month, the trader will change the method), even if you can stand it, don't you want to support your family? But if you trade 10 instruments at the same time, the period can be shortened to two or three months.

But there are also problems with the general trend, such as now they are all upward, there are many varieties that are long, then these varieties are equal to a variety, the higher the synchronicity, the more difficult it is to reduce the profit cycle, I have encountered a lot of long varieties of trend following, two consecutive years have been lost, do you think you can avoid this problem?

To solve this problem, it is best to control the net exposure of one side, technically not to do too long cycles, and the use of resonant filtration can also reduce the intervention of similar varieties.

This is especially true for fundamentals, because the cycle of fundamental positions is long, and it may take many years to see your trading skills, and the trading cycle is about to catch up with your adolescence, do you want to gamble with your life?

So can you understand the importance of money management (position splitting)? It's not just saving your account, it's saving your trading lifecycle.

Third, can fundamentals be combined with technology?

Fundamentals, combined with technical analysis, are a false proposition.

The profit of a variety industry is dead, it can't fall, the margin improves, the upward elasticity will be great, long, but what if it keeps falling? Like 15 years of black, the darkness before the dawn.

If combined with technology, it should be broken, and if it is based on fundamentals, the cheaper it is, the more it should be swept. The two are inherently contradictory, how can they be organically combined?

My approach is that fundamentals can't be combined with technology, but they have to be combined with timing. That is, the general direction at the beginning, if the general direction is long, the fundamentals are also optimistic, I will always hold it, if it falls too much, I will make up for it.

This general direction is macro sentiment, which can also be expressed technically, and there will be some linkage between many sectors, in general, that is, follow the trend. If in the general trend, the varieties do not perform well, it can only be said that your fundamental analysis is not in place.

After moving towards fundamental operation, I did not completely abandon technical analysis, because many opportunities are brought by technical analysis, and the large structure of the market is often secretly concerned by funds, and the biggest embodiment of capital is in technology.

In addition, I also have my own position management rules, which is "20 square position management", with a maximum of 4 varieties, 5% of the funds for each operation, and you can add two positions, with a maximum position of 60%.

Fundamentally, I don't have a stop loss, only when the floating loss is large, I will reduce my position by 5% until the reduction is completed.

The target price is determined based on fundamentals, and I really like to compare spot prices over the same period over the years, and in similar situations, it is easy to find a target price that can be targeted. This method can also find the support price, and the profit and loss ratio can be formed, but I don't use the support price as the stop loss price.

At this point, you can see the advantages of large capital split operation! If you have tens of thousands of dollars, you should do technical short-term and use filtering to shorten the profit cycle; If the funds within 600,000 yuan are fundamentals, then do one or two familiar varieties, study and track well, and control the amount of single intervention; If it is at the level of millions, splitting positions is the right way.

■The article is for reference only and does not represent the views of this platform and its institution, and you enter the market at your own risk. The futures market is risky, and investment needs to be cautious!