Depth! Why make 6 million U? First understand how to trade, where will you die? 1. Death without direction, There are only three situations in the market: rising, falling, and oscillating. Small cycles are intertwined, while large cycles have only one major direction. The major cycle is the direction you need to participate in, even if it has been running for a long time and reaches the top or bottom, the major direction will not easily turn around. 2. Death at random entry, The market is a mixture of rationality and emotion, that is, the combination of fundamentals and foam. You can earn money from both rationality and foam. The reflexivity theory tells us that the price does not reflect the value. Sometimes the market is far higher or lower than the so-called value, that is, the market will be crazy for a long time, crazy and illogical. There are two ways for a car running at a high speed to stop, one is to slow down slowly and then stop, the other is to brake failure and hit the tree directly. Unfortunately, most of the cases are the latter. It is determined to go short in the rise, and to go long in the decline. You have your own logic, but the market does not recognize it. 3. Died from inappropriate frequent transactions, Ultra short term trading has a magic that keeps you on the field pursuing maximum profit, causing you to oscillate between losses and profits. The secretion of dopamine in the brain makes people enjoy it endlessly. In theory, frequent trading can indeed achieve maximum returns, but you are likely unable to grasp this rhythm because there are always people who are different from what you think, or human-machine confrontation. The winning rate of ordinary people is very low, the principal continues to wear and tear, the profit is limited, and only time and profit loss ratio can cover the loss during the oscillation. The oscillation itself represents a sluggish trading, and ultimately can only do fluctuations in the wave band, but it is extremely easy to miss the one-sided market. 4. Died of untimely cowardice and boldness. Essentially, it is self proclaimed intelligence, either too foolish or too clever. I can clearly tell you that the vast majority of retail investors in the market are fools (including myself), and there are very few extremely foolish people among them. They lose the most, but the top intelligent people are equally few and lose a lot. On the contrary, those who are not very intelligent or foolish can achieve breakeven, and those who are not very intelligent can achieve maximum profits. Why? As mentioned earlier, the market is a combination of rationality and emotion. Pure rationality and pure emotion often fall into the contradiction of self circulating argumentation, which is extremely twisted and tangled. Pure rationality constantly searches for evidence to support its own views. When anti monoclonal antibodies explode, pure emotion likes to chase after the rise and kill the fall, always buying on the ceiling and selling on the floor. Being self righteous is reflected in the fact that the price is already so low that it should rise. In a downward trend, this belongs to taking the knife. Trading the trend according to the logic of oscillation always wants to make big profits with small risks. The result can be imagined. This is a small foolishness, which is also the current situation of most people. It is not too bad. The market will give you a small opportunity to solve the problem, it depends on whether you can seize it, which may take a long time. How do purely rational people suffer losses? They firmly believe that the price will reach a certain target and always wait for the price to trigger profit taking after opening the position. The good news is that the price has indeed been triggered, and they have indeed made a profit. However, reflexivity theory tells us that the price will further develop towards a larger space under emotional support, that is, sell out. Guess what these top smart people will do? They believed that the price had overshot and needed to be corrected, and then began to take on losses and increase positions until they died before dawn. The market eventually validated their logic, but that was after the position was liquidated Similarly, based on strong bearish fundamentals, short selling is definitely not wrong, but the rebound and rise are too strange. These top smart people will constantly increase their positions and short when the price is high. They firmly believe that the price is unreasonable, and then there is indeed a return to fundamentals, but that is also after the position is liquidated. Emotions are even simpler, starting with a rise and not daring to buy, waiting for a pullback in the middle, unable to resist entering the market and being trapped in the end. Those who are slightly less foolish will choose to stop losses, while those who are extremely foolish will choose to carry orders. Those who are lucky enough to follow the trend side may even get out of the trap or make profits later on. If you follow the wrong direction and don't stop losses, wait for the position to be liquidated. Those top tier smart people know well not to go against the market, know when to be bold and when to be timid, wait for the irrational pullback to come to an end, and then cautiously start to intervene. Once the emotions are gone and the price deviates far from the fundamentals, this is the time for bold heavy positions, which is called multi cycle resonance in technical indicators. Many people only know that this is a good position, but they never know the essence behind it. When these smart guys start to act collectively, it is the perfect time to take a ride. 5. Dying without patience, Trading is the art of waiting, and a high chance of winning is always waited for. Everything you do must be planned, and before entering the market, you need to organize your logic. Do you want to earn rational money or emotional money? Unfortunately, most rational money is often pushed to the reasonable range by institutions at the moment of data release. What you can do is to seize the residual heat of emotions and take short-term opportunities, or not participate in waiting for deep corrections before considering taking advantage. The former requires you to be bold, decisive, and believe in the power of chaos. The latter requires you to have enough courage and great patience, believing that the power of reason will overcome emotions. 6. Death without stop loss, An interesting phenomenon reveals the reason why most people experience stable losses. As animals, humans possess animal instincts, such as the tendency to take advantage and the aversion to loss. This widespread phenomenon in nature reflects a balance between different species and within the same species when all species operate according to this habit. However, the difference in intelligence between humans can sometimes be greater than that between humans and dogs, as humans are easily influenced. Remember, the winners in the market are very few, and if most people can make money, this market theoretically does not exist. It will soon disappear due to the depletion of liquidity, so most individual investors can make money. This situation can only be said to be accidental. But not the norm. So, to stand in front of the majority of retail investors and abandon human nature in trading, it is necessary to strictly cut losses, make big profits with small losses, and hold onto the thighs of institutions. Because they are the harvesters of retail investors, why must we cut losses? Simply put, stop loss is a form of insurance, a way to prepare for aggressive opportunities. If you are unwilling to bear the cost of patience, be prepared to bear the maximum loss that may be incurred due to lack of patience. It is a necessary means of pursuing maximum profits. 7. Death from ignorance, People often categorize things that they cannot understand as mysticism, precisely because it is impossible for humans to fully understand the world. To a certain extent, mysticism conforms to people's psychological sense of belonging, thinking that if I cannot do it, it must be bad luck, not a problem of operation. Essentially, it is attributed to the outside world. This is the underlying code of human beings. Looking at the world, there are various conflicts every day, and daily life is also full of family strengths and weaknesses. It can be said that people can live because they have enough emotions, and the reason why they die in trading is also because of emotions. When it comes to the certainty of trading, if the so-called master cannot explain it clearly to you, he himself does not understand, and then uses vague language to say some big things. Reason, saying that success is enlightenment, and failure is not enlightenment yet, is just nonsense, Because mathematically speaking, in both long and short directions, the probability is 1:1. The most important thing in trading is information, and most people cannot obtain timely information. The amount of funds is also insufficient, and they are destined to be the disadvantaged party. For ordinary people, they lose from the moment they participate, but we want to participate. We like this stimulating feeling, and this mathematics has proven that the conclusion that most people will die seems so pale and powerless emotionally. What should we do exactly? The essence behind it involves mathematics, including Kelly's formula for position management, Bayesian conditional probability, Markov chain, maximum likelihood, what are independent events and dependent events, as well as knowledge of psychology. In summary, mathematics provides position management, patience, and the use of emotions.