The financial market is a grand arena of fame and fortune, filled with celebrities and all sorts of ghouls and demons. Some people aspire to achieve financial freedom within it, while others simply wish to add a chicken leg to their dinner.

However, it turns out that the probability of making a profit from trading is really low. Having communicated with many traders, I've found that everyone believes they are among the 1 in 9 who can make a profit.

At this point, I would ask: On what basis do you think you can make a profit? Why are you the one in the minority?

Many friends might feel offended by this, thinking I'm being impolite. But in the ruthless world of trading, no one talks about politeness; everyone is fiercely competing for a share of the market, and profit is the bottom line.

In fact, I've been asking myself this question all along: On what basis can I make a profit? I've realized that there is a possibility of profit only when others are frantic and you are calm, others are lazy and you are diligent, and others waver while you remain steadfast.

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Today, I won't mince words and will share my solid trading experiences over the years, hoping to inspire you.

1. On what basis do I make a profit? By mastering trading techniques.

Mastering trading techniques is the most basic quality of a trader, and it's a very simple truth. In any profession we engage in, or if we want to make money from any industry, we must understand the rules of that industry and master its techniques.

Over a decade ago when I started trading, I began learning about trading techniques. I started with the most fundamental "Japanese Candlestick Charting" and read it many times, even copying it once by hand.

Later, I read many technical books, watched numerous videos from both domestic and international sources, and attended offline training sessions, which gradually helped me form my own trading system.Let me provide a few simple examples to illustrate the importance of mastering trading techniques.

1. Selection of trading instruments.

Take foreign exchange as an example. Many currency pairs' charts are correlated with the US Dollar Index, moving in the same direction, with very similar trends. So can we just randomly choose one to trade? Of course not. Different instruments have different operating spaces and the smoothness of the market movements vary in detail.

The chart shows a comparison of the trends of three foreign exchange instruments last week. On the left is the Euro against the US Dollar, in the middle is the US Dollar against the Swiss Franc, and on the right is the Australian Dollar against the US Dollar. Among these three instruments, the Euro against the US Dollar has the smoothest trend and the largest operating space. Let's compare them separately.

First, compare the Euro against the US Dollar with the US Dollar against the Swiss Franc (the trends of these two are basically synchronized but mirrored).

On Wednesday night when the market started, the Euro against the US Dollar rose quickly without any consolidation, showing a very smooth trend. The US Dollar against the Swiss Franc, however, formed an expanding consolidation during the market's initial phase (as shown by the red circles in the chart).

In practical trading, a smooth market trend can generate profits more quickly, which is conducive to the execution of trades. The expanding trend of the US Dollar against the Swiss Franc, with its back-and-forth market movements, leads to frequent changes in account profits and losses, which can have a serious negative impact on the trader's psychology, making it difficult to execute trades and less conducive to profitability.

From the perspective of execution difficulty, the Euro against the US Dollar has an advantage.

Looking at the comparison between the Euro against the US Dollar and the Australian Dollar against the US Dollar, the blue rectangles in the chart represent a similar trend segment. The Euro against the US Dollar moved nearly 130 pips, while the Australian Dollar against the US Dollar moved less than 90 pips. For the same order, the profit space for the Euro against the US Dollar is larger.

From the perspective of profit potential, the Euro against the US Dollar also has an advantage.Additionally, the transaction costs in Europe and America are lower than those in the US-Swiss and Australian-US markets, which is another advantage.

These details in each variety may seem small, but when accumulated, they become a significant advantage. When selecting varieties, one can refer to the following three points:

(1) The smoothness of market movement

(2) The space of market movement

(3) The cost of trading

Secondly, the selection of market structure.

Market trends operate in wave patterns, and among all the waves, the main upward trend waves have a large space and fast speed, which are the most profitable. Therefore, the market structure I choose is to only trade the third wave of the main upward trend.

The chart shows a 1-hour candlestick chart of the Euro against the US Dollar. Comparing all the correction waves with the main upward waves, the space of the main upward waves is at least 50% more, or even double, compared to the correction waves. By trading the same amount, trading the main upward waves can yield a greater profit space than the correction waves.

This is the kind of experience that can be summarized after countless times of honing our trading skills in the market, which is why mastering trading techniques is so important.

2. How do I make a profit? It's because I have an extraordinary amount of patience, and I study diligently and seriously.Here is the translation of the provided text into English:

Talk about my process of learning trading techniques:

(1) Read books and remember the content.

(2) Watch online technical articles and videos, and take notes.

(3) Attend some offline training, combine online knowledge to form my own trading system.

(4) Based on my trading system, build a trading system, do a lot of backtesting, and establish and improve the trading system (the most arduous work).

(5) Read books on trading psychology, philosophy, and refine my trading philosophy.

Although these five points are only a few dozen words, each one is extremely patient-testing and tests whether you have the ability to study seriously.

Speaking of trading techniques, I have a few words of advice. I do not encourage everyone to learn a lot of technical indicators and study a lot of trading techniques, but everyone must thoroughly study a certain indicator.

Take moving averages as an example.

How many types of moving averages are there? What are their differences?How many different uses are there?

In a market trend, what kind of performance will moving averages with different parameters have?

What kind of market conditions are suitable for moving averages with different parameters?

Which moving average parameter is more suitable for one's trading style?

What are the differences when matching moving averages with different parameters to different time cycles?

These and other questions all need to be understood thoroughly.

Studying an indicator in depth, maximizing the depth of learning, is like digging a well; water will only flow out when you've dug to a certain depth. If you only scratch the surface, you will never find the water source.

Many friends who discuss trading with me start trading without systematic learning and only realize the need to learn after suffering losses. But by that time, your trading philosophy may have been eroded, you may have become disdainful of small profits, and you may no longer have the time and courage to learn, which is the most terrifying.

Therefore, I hope everyone can learn before trading. Most people in this market do not learn because learning is painful and goes against human nature. So when you immerse yourself in learning, that is the time when you surpass the vast majority of people.

3. Why do I make a profit? Because my will is stronger than yours.Many people encounter issues with execution, and often attribute their inability to make money from trading to a poor mindset. Many can accurately predict market trends but fail to execute trades well, feeling that their willpower is not strong enough, either exiting too early or being unable to decisively cut losses.

In my trading, there is essentially no issue with execution because I have experienced losses, significant losses, and also periods of stable profits. Therefore, I know what is right and what is wrong, and my brain naturally does not guide me to do the wrong things.

Let me share my mental state with you.

For example, during non-farm payrolls, when I see the market prices soaring and the candlestick charts flickering, can you say I don't feel the itch? That's impossible. I know that if I enter at this moment, I might make a profit.

When I have such an impulsive urge, my brain automatically reminds me of my previous experience of chasing the market at the peak during non-farm payrolls and getting trapped with huge losses. That uncomfortable feeling is hard to forget. At this point, an instinctive reaction forms: since my trading system can make a stable profit, why should I gamble on this? What if it triggers my gambling nature again? It's not worth it. What's the point of making money if I can't rely on luck every time?

So, my impulsive hand retracts, I step away from the computer, calm down for a few minutes, and that urge passes.

That's why I say, encountering losses as soon as you enter the trading market can sometimes be a good thing. It makes you more cautious, more reverent towards the market, and more aware of the difficulty of trading.

As for those who experience so-called beginner's luck as soon as they enter the market, that may not necessarily be a gift from heaven; it could also be a poison, letting you taste the sweetness and then becoming addicted, eventually falling into the trap of desire.

In fact, I later discovered a method that allows you to feel the rhythm and cruelty of the market without losing real money.Firstly, it is the learning we mentioned earlier. The more you learn, and the more you observe other people's trading experiences, the more comprehensive your understanding of the market will be (of course, I am referring to the correct and positive learning, not the miscellaneous and chaotic sharing that is prevalent in the market).

Secondly, make use of backtesting and simulation accounts. There are backtesting software available on the market that can help you test your trading system in historical market conditions.

For instance, many people have a misconception that as long as they do not set a stop loss and have enough capital, they can always weather the market and wait until they are profitable.

However, if you backtest your trading strategy over the past 10 years of historical data without setting any stop loss or randomly not setting a stop loss, you will inevitably encounter a margin call. Moreover, you can statistically determine how many times you could have been wiped out in a given period.

When I was doing a lot of backtesting, many of my trading perceptions were overturned. These facts were in conflict with my common sense, but you have to admit that facts are facts and do not change according to your will.

When many facts are laid out before you, you will be forced to be "physically steadfast." If you know what is wrong and what is right, and you still insist on doing the wrong things, then you need to work on your self-discipline.

4. How do I make a profit? It is because I consistently make a profit, yet I still summarize, reflect, and correct, and I maintain an attitude of learning.

I have been trading for 11 years and have achieved consistent profitability, but I still make weekly trading summaries, review my trades for any omissions or problems, and discuss trading issues with my team members, refining details and engaging in reflection and correction.

Humans are not machines; we all make mistakes. Moreover, I assess how much these mistakes affect the profitability of a particular phase, thus leaving a margin of error for my mistakes and adjusting my profit expectations accordingly.

Only in this way can you maintain a healthy trading mindset and keep moving forward.As a seasoned trader with over a decade of experience, I am still constantly reflecting and summarizing, while many newcomers to trading may not even have the habit of keeping trading records. After suffering losses, they don't know where their problems lie, which is the worst scenario.

Therefore, I suggest that every trader learn to record, summarize, and reflect. Draw up a table and write down all your trading behaviors and outcomes; don't consider it a hassle.

After a period of recording and summarizing, it becomes very easy to identify the trading mistakes you often make and to formulate future trading plans.

Additionally, I have a habit of reading extensively. Apart from paying attention to some fundamental information, I dedicate most of my time to books.

I would like to share some reading tips with you. There are many audiobook apps on the market that condense the essence of a book into 30-40 minutes. If you come across a book that seems interesting, you can give it a listen first. If you find the content truly helpful, then consider purchasing the physical book. This can improve reading efficiency.

Through extensive reading, firstly, it calms the mind, and secondly, it allows you to understand more about the diverse aspects of life. Many life principles are相通 with trading principles. After reading many books, your perspective and cognition of things will also change.

Thus, I believe that no matter what you do, your mindset and cognition are extremely important and are key factors in determining whether you can succeed in a task.

5. How do I make a profit? By having a deeper understanding of human nature and deliberately avoiding challenges to it in trading.

Let me give an example from a few days ago. A friend told me about his trading system, which involved looking at several indicators at the same time and filtering through three or four cycles. The trading results were not good, and he was always forgetting things.

This is what I told him: There is an instinctive sense of insecurity in human nature, which believes that the more indicators, the more cycles, and the more complex the system, the higher the success rate will be. This is a human need, but it is not a requirement for profit.In trading, many people are complying with their own human needs rather than the need for profit, which is quite bad.

For example, when it comes to stop-losses, many people are reluctant to strictly implement them, not because they can't afford the loss, but because of the inherent aversion to losses and the attribute of hating to lose that comes with human nature.

Many people have experienced this: when holding a position with floating losses, it's very painful, but once they actually stop the loss, they become relaxed instead.

Isn't that perverse? But that's just how human nature is.

According to behavioral economics, the pain of losing 1000 dollars is twice the joy of making a profit of 1000 dollars, but rationally speaking, they are both 1000 dollars.

There are many similar examples about human nature, and we cannot completely set aside our human weaknesses to trade; that would be divine, not human.

What we need to do is not to fight against our human nature, but to try to go along with it. How should we understand this statement?

For instance, when the amount of capital is large and the position is heavy, you may feel uncomfortable and even shaky when trading, so at this time, we can reduce the position size, which will reduce the psychological pressure and the challenge to human nature, allowing us to better control emotions and execution.

Another example is when your trading strategy has a high profit-to-loss ratio, with significant profits when successful, but a low success rate, with 70 losses out of 100 trades, which can be extremely emotionally stimulating. If you are filled with fear of losses, then you can adjust and reduce the profit-to-loss ratio a bit, increase the success rate, and balance them to make your psychology more comfortable.

In essence, it's about lowering your profit expectations: if you originally wanted to double your money, now cut it by two-thirds; if you originally wanted to make a 50% profit, then halve it; if you originally wanted to achieve financial freedom, then start by adding a drumstick to your dinner.When you find that by going along with your own human nature and lowering your profit expectations, the sky becomes bluer and trading becomes easier. A good mindset leads to good profits.

In trading, I focus on fewer varieties and only pay attention to one type of market situation. My trading system, under clear and distinct classification, strives to be as simple as possible, easy to execute, and my expectations for returns are not very high; they are within the range of risks I can bear.

This is because I deeply understand that I am ordinary and human nature is powerful. I cannot conquer it, so I do not challenge it. I try to go along with it, we each go our own way, and I am content with earning the money I can make, that's all.

6. How do I make money? By taking every trade seriously.

A friend once asked me: "Brother Ba, I made a long position at xx position, where is it appropriate to set a stop loss?"

At this time, I would be overwhelmed and even a bit angry. Why are people so careless in trading? Does money come from the wind? Shouldn't one think about the stop loss before opening a position?

Many people deposit money into trading accounts, and it becomes a string of numbers. They really start to think it's just a number and treat trading as a game, which is extremely irresponsible.

There is a phenomenon where a trader might spend 10,000 yuan to buy a computer in reality, comparing different brands, comparing prices on major websites, looking for coupons, and studying for a long time before making a decision.

However, in trading, an order that loses 10,000 yuan is opened without any planning, just on a fleeting impulse. They don't consider the details, won't think about what kind of loss will occur if they are wrong, how big the risk is, and just buy first.

But for me, every opening position in trading, I will take it seriously, judge whether the conditions for opening a position have been met, will deduce step by step, and check for any mistakes or omissions.Is the calculated position correct? Before opening a position, double-check it again. After opening, check if the stop-loss and take-profit levels are set correctly? Before turning off the computer each time, check if the orders in the order column are correct? Are there any omissions? Have you forgotten to delete the previously placed orders, etc.?

For the same order, some people will carefully consider every detail, plan every step in advance, and minimize the possibility of making mistakes. Others act without thinking, follow their impulses, open positions casually, and then consider what to do if they are right or wrong. There is no planning, no consistency, profits cannot be held, and losses are not stopped.

Who among these two types of people can achieve profits? It goes without saying.

The financial market is a disorderly world where human nature is floating all over the place. If you do not establish your own rules in this world, you will be like a headless fly, bumping into walls with human nature everywhere.

In fact, making a profit is not that difficult. Slightly control your own human nature, create your own rules, and execute them, and you will surpass most "headless flies".