Buying today and reaching the limit tomorrow is a delusional speculative behavior. As the saying goes, "The true edge of a sword comes from continuous sharpening, and the fragrance of plum blossoms comes from enduring the harsh cold." At this moment, it is more meaningful to be calm and not rush for quick success. Instead, learning something substantial could be more beneficial than trying to snatch profits amid market chaos.
Success is a habit, and successful trading is also a habit! Many traders mistakenly believe that participating in market trading requires hard labor, which is a misconception. Hard labor refers to the process of forming a method, not the process of participating in actual trading. In fact, successful trading is simply the correct and repetitive use of the right patterns! Successful trading turns the correct trades into a habit!
Tolstoy once said that everyone in the world wants to change others, but no one wants to change themselves. Rodin said something similar:
"Someone asked me how I could carve a stone into something so lifelike. I told them that beauty has always been within life; I just chip away the excess."
It's not hard to notice that successful people seem to always succeed, while those who fail seem to always fail. Why is that? A social psychologist analyzing this phenomenon said: "It's nothing else but habits at play. If a person gets used to running every morning, they will run like that for decades; if a person gets used to being lazy, they will wander around with nothing to do; if a person is accustomed to diligence, they will overcome all difficulties like the Japanese character Akin, and thus be invincible. The same is true for success."
Once you have a high probability of winning pattern that suits you, accurately and correctly applying it in practice becomes the key to success or failure. When you can correctly repeat it many times, you will form a habit, a habit of success; likewise, failure can also become a habit. Chen Anzhi said, "If you plant a cherry tree, you will harvest cherries; if you plant an apple tree, you harvest apples." Whether you choose the habit of success or the habit of failure is entirely up to you.
Factors in the Formation of Trading Habits
The formation of good trading habits is necessarily based on a full understanding of the market and oneself, produced by repeated correct actions.
Understanding Habits
The power of habits is astonishing. There is a fable about this:
A wealthy man without an heir left his considerable fortune to a distant relative, a beggar who had lived on alms for years. Overnight, the beggar became a millionaire.
In an interview with the lucky beggar, when asked what he wanted to do first after inheriting the fortune, the beggar said: "I want to buy a better bowl and a sturdy stick so it will be more convenient for me to beg in the future."
This shows the immense impact of habits on us. They are consistent and affect our behavior and efficiency over the years, ultimately influencing our success or failure.
An animal experimenter conducted an experiment:
He put a group of fleas in a test cup and covered it with a piece of transparent glass. Fleas naturally jump, so many of them hit the glass, making tinkling sounds.
After a while, the experimenter removed the glass and found that all the fleas were still jumping but had adjusted their jumping height just short of where the glass had been to avoid hitting their heads. Not a single flea escaped—not because they couldn’t, but because they had adapted to their environment.
This experiment proves that fleas, in order to adapt to their environment, were unwilling to change their habits, preferring to lower their capabilities and close off their potential.
Humans are similar to other forms of life in this aspect. About 5% of a person's daily actions are non-habitual, while the remaining 95% are habitual. Even innovative actions that break the norm can eventually turn into habitual innovations.
According to the results of behavioral psychology research: Repetition for more than 3 weeks forms a habit; repetition for more than 3 months forms a stable habit, meaning any action repeated for 3 weeks can become a habitual action and form a stable habit.
Irving Henry, an American real estate tycoon and former addict, was extremely fond of smoking. Once, while driving through England in persistent rain and tired from the journey, he stayed over in a small town inn. Waking up in the middle of the night with a craving for a cigarette, he found his cigarette box empty. He searched all his belongings but couldn't find a single cigarette. The inn's service desk had already closed, and the stores on the streets were also closed. He could only go to a train station a few streets away to buy some.
Because the craving was unbearable, he thought even one cigarette would help. So, he got dressed, grabbed his raincoat, and prepared to head out. However, at that moment, he suddenly thought: "What am I doing? A fairly successful businessman, a rational and capable person who commands others, is about to walk several streets in the middle of the night in the rain, all for a cigarette?" This did not seem like the behavior of a successful person. So, he decided to control this bad habit and went back to bed.
Since overcoming his addiction to smoking, he felt a sense of accomplishment in success. From then on, he kept it up, and after three months, he truly quit the bad habit of smoking. This story tells us that, in essence, success is a habit.
Aristotle said, "We are what we repeatedly do. Excellence, then, is not an act, but a habit." I believe this applies to the speculative environment as well.
Napoleon Hill said, "Success and failure are both the result of the habits you develop. Some people approach everything they do with a goal in mind, giving it their all; others are accustomed to drifting along with the tide, leaving everything to chance. Whichever type you are, once a habit is formed, it is hard to change."
Habits determine the outcome of our actions and the success or failure of our speculations. Developing good habits is undoubtedly very important for our trading success and even our lives. As the psychological master William James said:
"Sow an action, reap a habit; sow a habit, reap a character; sow a character, reap a destiny."
Understanding the Market
Anyone who has traded futures knows that the market is essentially made up of the rise and fall of commodity prices, and understanding the market is about grasping the trajectory of price movements. Generally speaking, there are two states of price movement: trend and consolidation.
1. Trend state. Dow Theory tells us that a trend consists of a series of continuously higher (or lower) highs and lows. Connecting two of the highest (or lowest) and the lowest (or highest) points, we derive two trend lines, with prices operating within their ascending (or descending) channel. As long as the channel holds, the trend remains unchanged. Trends have continuity and stability; there may be adjustments, but the direction does not change easily.
2. Consolidation state. According to shape theory and candlestick combination theory, the characteristic of a consolidation state is that prices oscillate within a certain range. It can also be divided into short-term, medium-term, and long-term consolidation based on time. Consolidation usually transitions from wide fluctuations to smaller oscillations. Consolidation is only temporary; it could be a rest during an uptrend or downtrend or preparation before a market reversal.
Successful speculation involves making counter-trend operations that follow the path of least resistance according to market movements. It means speculators, based on their speculation experience and operating system, conduct calm analysis and always clearly grasp the development pattern of the market, staying as still as a maiden when not moving, and swift as a fleeing rabbit when in action, capturing opportunities like a wolf!
The true essence of speculation is seizing and discovering significant trading opportunities. The greatest tragedy in speculation is missing significant opportunities without even realizing it!
Understanding Yourself
"Know yourself," a famous maxim by the great ancient Greek philosopher Socrates, is inscribed high on the temple of Apollo at Delphi, blessing future generations with its profound wisdom. To distinguish yourself from the average and become an expert-level trader, you must learn to understand yourself. You must be familiar with the various mechanisms of market operations, form an integrated pattern in your mind, and clearly understand how your strengths and weaknesses affect your trading performance. As Adam Smith said in his book "The Money Game", "If you do not know who you are, the market is an expensive place to find out."
First, understand your risk tolerance. Some people can't eat after losing a few percentage points; others may lose hundreds of points and not care. This is the difference in risk tolerance. There is no right or wrong, only different strategies to cope. It might affect your trading mentality and dominate your emotions. Those with strong risk tolerance can pursue trend markets, while those with low risk tolerance can opt for short-term trading.
Secondly, understand human nature's weaknesses and your own characteristics. The world hustles for profit; people often fall deep into it in the face of benefits and temptations. On the surface, futures investment seems easy to profit from—just a click on the keyboard might result in several times the profit. However, in reality, futures investment is far from as simple as imagined. The harsh reality quickly shatters the dreams of shallow traders, with many investors being wiped out within half a year.
Why is that? Because of greed and fear! The real enemies of life are inside us, and in investment behavior, the faces of greed and fear constantly reappear! Greed and fear are human nature; they often dominate our will, preventing us from objectively and calmly analyzing the market.
The Agama Sutras say, "Do not dwell in the past, do not dream of the future; the past is gone, the future has not yet come, think of the law of the present moment, live in the now." The Tao Te Ching says, "Bend and you will be whole, curve and you will be straight; be low and you will fill, be worn and you will be renewed, have little and you will gain, have much and you will be confused." The world is unpredictable, but "to every action, there is always opposed an equal reaction," an unresistable natural force between heaven and earth, the cycling principle of "sunrise and sunset, blooming and wilting" remains unchanged.
The investment market itself is a zero-sum game, with no absolute pros and cons, no absolute wins or losses. Being cautiously optimistic, in pessimism, there's already brewing a turn of events. Without bulls, there are no bears; without downturns, there are no upturns; without ups and downs, what market is there?
Furthermore, understand your personality traits. Whether you are stable, resilient, brave, or irritable, active, timid, this is crucial for developing good trading habits and thereby establishing your trading system, forming your trading style. Just as humans are products of nature and cannot defeat nature, investors in the face of the market are very small and fragile. If the market could be accurately predicted by most people, then the market would lose its reason for existence. As an investor, you can only adapt to the market, follow the market, go with the flow, to possibly survive in the market.
As mentioned in Lai Tang Zen, "Bamboo shadows sweep the stairs without dust, moon wheels through the marsh without trace, water flows rapidly but the environment remains calm, flowers fall frequently but the mind remains leisurely"—if traders can face external stimuli without greed, without fear, calmly and indifferently from a transcendent standpoint, then they can freely advance and retreat, pursuing a calm inner world, which is the greatest challenge in the investment field.
In summary, knowing yourself means understanding your risk tolerance, personality, habits, and character traits, thereby forming your personalized trading style.
The way of investment is not to blindly follow others, not to replace your methods with so-called popular trading methods, but to extract what suits you from the general methods to deal with the market.
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