A while ago, a friend of mine approached me to chat about his trading system.
From the beginning, he talked about how decisive and straightforward his stop-loss strategy was, how he let profits run by enduring reasonable drawdowns, discussed the simplicity of the grand principles, criticized those who played flashy "fools," and listed the critical aspects of decision-making, and so on...
After a bout of fervent explanation, he took a sip of tea, adjusted his emotions, and then asked me:
"What do you think of my level?"
I said, "Your explanation is excellent, but you're missing a crucial element to become a master in my eyes. You need to grasp the true essence behind these four words."
He asked, "What four words?" Looking a bit skeptical.
I told him, "Your trading logic is very rigorous, compressed to the extreme efficiency based on the correct foundation. However, regarding your habits in fund management, you often throw around terms like 'double,' 'several times,' with a demeanor as if you've mastered all the core secrets of speculation and are about to soar."
He immediately said, "I understand, don't go all in, but rather lighten positions and diversify accordingly."
I replied, "Yes, but these are just the basic concepts and implementation means of fund management. If you can grasp the correct trading logic, you will naturally understand that diversification and lighter positions are essential. However, this is not everything."
"You still need to grasp a higher-dimensional core of fund management, which consists of just four words:
Lower your expectations."
1. This is an era of restlessness, filled with anxious people. Online, almost every field has numerous courses teaching people how to go from a monthly salary of 5,000 to an annual income of a million in a short period...
The trading field is even more so. Traders are more anxious than others because our profession itself seems more explosive.
So, they study massive profits every day, researching how to cross class boundaries in one stroke. Forex traders talk about multiplying their earnings tenfold, while options traders even study how to achieve ten thousandfold returns...
Some say that in a group where traders gather, if you haven't made 50% in the past month, you'll be looked down upon.
It's brutal.
The market is filled with all kinds of hasty traders, seeking the Holy Grail and dreaming of getting rich quickly. They carry an air of arrogance and recklessly charge around like a volcano...
This has been the basic situation since the existence of the speculative market.
2. In a restless era, the even more restless K-line market is fundamental. That's why you'll find that in our speculative trading field, when describing a trading master or the high level of certain trades, a label is often attached, making the master or the high level seem somewhat transcendent.
For example, "seeing through the world of mortals," "carefree clouds and wild cranes," "tranquil and natural," "not pleased by external gains or saddened by losses," and so on.
In reality, I believe that absolutely reaching this legendary state in the speculative trading field does not exist. If so indifferent, why would they wade into the muddy waters of speculation? Since entering speculation, there must be something they seek.
However, although the top legendary state might not exist, it is undeniable that some traders exude an air of ease and serenity.
Indeed, some traders can relatively reach a state where they are unfazed by external gains or losses, calmly watching the flowers bloom and fall or the clouds roll by in the sky.
This aura and serene state does not only encompass the powerful confidence after seeing through the truth of speculation but also includes swimming against the tide in a desire-driven trading field.
Desire brought me here, but I actively control my desires.
In other words, the nonchalance of top masters does not purely stem from invincible confidence. It also involves reasonable planning of desire levels. To put it more bluntly, the technique they use to achieve this state is:
Lowering expectations.
Without expectations, naturally, there is no excessive joy or sorrow. With fewer expectations, one can be relaxed and at ease.
3. Many people, upon seeing these four words, will immediately understand.
They might dismissively say, "Isn't it just about lightening the position?"
Yes, controlling risk exposure within a reasonable range is a way to lower expectations, fearing death and drawdowns, thus managing light positions. However, controlling risk exposure is just the foundation of lowering expectations.
What I mean by lowering expectations is a psychological state.
Many traders also diversify in action, and their positions aren't high, but they are very impatient, with high expectations, eagerly hoping their positions can yield quick, fierce, and substantial profits.
This is the basic state of having high expectations.
You need to understand that in a state of high expectations, your positions, your expectations, all show on your face, embedded in your words, influencing your trading behavior.
When you see those with higher positions achieving massive profits, you will eagerly feel the urge to expand your positions for higher gains. When you see everyone around you talking about multiplying their money several times, you might impulsively go all in. Additionally, when you realize that others' drawdowns are smaller than yours, you might suddenly become extremely cautious, not daring to act, and when you find that others are earning more than you, you might feel a strong sense of inadequacy with your "huge" floating profits...
Comparison is a major source of noise, and excessive expectations amplify these harms, with the degree of amplification being directly related to the extent of your expectations.
When your level of cognition is insufficient to suppress these noisy disturbances, you will collapse.
All the correct things you have painstakingly accumulated before will collapse like a skyscraper losing its foundation.
Your cognition will be shattered, you may lose the courage to execute altogether, become completely unbalanced, or perhaps revert to the primitive state, continuing to search in this anxious era for the invincible Holy Grail to satisfy your desires...
4. Lowering expectations is crucial. It is a higher-level technique in fund management.
Many people study offensive strategies and trading logic every day, appearing strong, but they lack this aspect in their cognition, which keeps them a distance away from reaching the level of a master.
Being able to lower expectations means you won't excessively anticipate your trading system yielding high returns. You execute it calmly, knowing that your core mission is to continuously apply this correct trading logic within the bearable risk.
Whether it earns more or less, you won't care much. You won't be impatient due to external noise, nor will you be troubled by your current losses.
With low expectations, you execute absolute correctness.
Understanding the ultimate meaning of doing your best and leaving the rest to fate, you can naturally navigate the fluctuant K-line movements with ease and survive in the long term.
For more related trading questions, please contact CWG A Hai;
