Big market, use the simplest way to follow the rise or fall

We all learn many lessons along the way, in our own learning processes, and from the lives of others. However, this doesn't mean we are experts in human behavior. We can't learn this through reading, no matter how high our IQ is or who teaches us. How do we truly learn? Sometimes, we must learn through more experience and accumulation. —Buffett, 2019 Shareholders Meeting.

Theory can't change the world, nor can it change ourselves; only time and experience can.

The purpose of learning trading techniques isn't to make money immediately.

It's to learn to understand and interpret the market from a specific perspective. Trading theory itself is static, but cognition should be flexible and unique. These different perspectives you observe will become the individual characteristics of your future trading style.

Just as reading doesn't directly generate wealth, it can help us better understand the world from a more valuable perspective, which is the source of the ability to ultimately acquire wealth—what we often call a pattern.

The same is true in trading. Trading techniques don't directly generate profits.

Of course, it's not the case that simply mastering enough trading techniques will allow you to do whatever you want in the market, as many people believe.

Trading techniques are indeed important.

But if your ambition is to be a good analyst, it's sufficient to stay within the technical realm.

If you want to be a good trader, technical analysis, no matter how important, is only the foundation; there are more important things to learn.

All technical indicators are merely traces of past price fluctuations, and relying on them to predict market trends is wishful thinking.

Of course, this trace can also be described as a form of logic, but the triggering conditions for this logic include not only many inevitable factors but also many accidental ones. As a result, once triggered, it's impossible to re-establish the right combination of these factors for a second time.

The logic remains the same, but it will be more or less distorted. This is the saying in the market: history repeats itself, but not exactly.

Learning different trading techniques is indeed essential for traders. The market can help traders understand it from different perspectives, which ultimately helps them develop trading skills. Although the market is virtual, the people behind it are real.

Learning trading techniques is a process, not a result. Traders who treat trading techniques as a means to determine their profits and losses will find it difficult to develop their own trading skills and will eventually be forced to leave the market.

The process of learning to trade is more like a process of simplifying complex thinking.

Even though you have learned many trading techniques and summarized many patterns, you will find that all the seemingly uncertain appearances cannot mask the reality that the market will either rise or fall.

For traders, the most reasonable and wisest approach is to focus directly on the results since you can't grasp the process.

I admit that I can't grasp the process of price movements, but I can follow the rise or fall in the simplest way. This is the motivation for the emergence of trading systems.

Since guessing is always wrong and the market's direction is ultimately unpredictable, don't try to guess that it will manifest in a specific trading signal.

All you have to do is follow!

There's a famous Wall Street saying: "A good trader is one without an opinion."

I'd add: "Or rather, the direction the market is moving is their opinion."

Following the trend itself is the trading method that most closely follows the trend, although it manifests itself as chasing highs and selling lows, which sounds unpleasant.

In fact, chasing highs and selling lows is also the main reason for many traders' losses. The reason lies in the inverse transformation of probability and trend.

The more pronounced the trend and the greater the volatility, the lower the probability of it continuing in its original direction, and the greater the probability of a pullback or reversal. Traders often buy at the ceiling and sell at the bottom, especially for traders using aggressive breakout strategies.

This gives rise to two concepts: probability and stop-loss.

All losses arise from what we believe to be a high-probability event of trend continuation, but in reality, it is a high-probability event that turns into a low-probability event. After this transformation, the low-probability event becomes a high-probability event, and the trade that was originally with the trend becomes a counter-trend order.

What's the only thing to do at this moment? Stop your losses!

What's the biggest fear at this moment? Getting lucky!

The market can sometimes be incredibly volatile, fluctuating wildly. Despite this, you should resolutely stop your losses. Only in this way can you stay in the market. For those who insist on doing the right thing, even if they're wrong, they're still right. For those who do the wrong thing, even if they're right, they're still wrong.

How did the 80/20 rule come about?

As a new trader, if others have been wiped out while you still have funds available for trading, you're already in that "two" situation.

For those who leave, it's like a gambler who, after having a taste of the high, no longer has the time to reflect on their experiences. Their losses become permanent losses, while for you, staying in the market to verify and learn from them becomes a de facto cost.

Finally, I want to say: If you obsess over small, incremental steps in trading techniques, you'll ultimately lose yourself in uncertainty.