EagleTrader Trader Interview | Value may not necessarily create profits, trading is the core

In the trading market, many people desire stable profits, but few people can truly stick to the harvest stage.

This issue [EagleTrader Trader Interview] We approach Huang Xiaodong – a trader who has been deeply engaged in the field of stock investment for many years.

Three years ago, he officially entered the world of foreign exchange trading. Unlike the newcomer who was full of passion from the beginning, he paved a stable road for his trading with his years of investment experience.

Value may not create returns, trading is the core

Trader Huang Xiaodong has been deeply engaged in stock investment for many years, but through repeated reviews and practices, he realized a cruel fact:

” Through years of experience in stock investment, value may not create returns, and in most cases, trading creates returns. Because the market is the most sensitive, prices contain, and even expect information. So I firmly believe that trading is the way that suits you.”

This keen understanding of “price often reflects market expectations before value” made him firmly determined to switch from stocks to foreign exchange. The high liquidity and regularity of the foreign exchange market provide a broader stage for his strategy.

The decision-making system with technical analysis accounting for 90%

If you want to summarize the trading system of Huang Xiaodong traders in one sentence, it is “technology first”. In his opinion, technical analysis is not only the core of buying and selling decisions, but also the foundation of the trading system.

“I think in my decision-making, technical analysis is the basis and is the key factor in buying and selling decisions, so it accounts for 90%; fundamental analysis is actually an interference item. Most of the time in the market, important information to be released has been reflected on the trend. Few information goes against the trend after it is released. Therefore, if the trend is unclear and the important information is released, you can avoid trading during this period and intervene when the trend is clear, so it accounts for 5%; and intuition and experience are used for verification after holding positions. If it does not meet the expectations, you should stop loss or take profit in time, so it accounts for 5%. “

This clear weight allocation also makes his operation logic extremely concise: swing trading at the hourly line level, light position entry, and strict execution of stop loss to avoid disturbing the rhythm due to sudden news.

Light position and stop loss: the key to steady profit

As for the core of long-term stable profit, his answer is also direct: “I think that stable profits in the medium and long term must be firmly persistent.Do strategies, don’t be influenced by your mentality, and do whatever signals come out. Secondly, light positions and make mid-line-level bands so that they will not be disturbed by some fluctuations. Do not think it is a good opportunity and have a heavy position. ”

He always insists on light positions, controls the risk of a single transaction within the scope of affordability, and keeps the principal through strict stop loss.

When asked about the position plan, he again emphasized:

“If there is a large loss, it must be an error in the buying point or a small probability event, and then a stop loss plan should be made immediately. If it is an operation at the hourly line level, it can be completed in the rebound at the five-minute level. I believe that the stop loss should be closed all positions instead of batches, and do not increase positions, as this is particularly easy to make mistakes and add mistakes. ”

He does not allow emotions to take over decisions whether it is profit or loss.

“It is a mistake to have a heavy position. If there is a profit retracement, you should immediately stop profit and terminate this error. Then evaluate the market and continue with the next trade with the right position. ”

Summary from the liquidation of positions, the strategy is constantly polished

Like many traders, Huang Xiaodong’s trader’s growth is not smooth. “The initial trading was caused by excessive positions and trading against the trend, which was a relatively low-level mistake. I was not frustrated at the time, but immediately summarized and made changes to the strategy. ”

This experience did not defeat him, but became a turning point in his trading philosophy. He learned to thoroughly review each transaction and analyze whether the profit comes from strategy or luck.

“After each transaction, we need to review it to see if it is due to the effective strategy or luck. If it is caused by luck, even if you make a profit, you must review your mistakes. ”

In terms of strategy, he always insists on gradual improvement rather than major adjustments:

“There is no major modification of the strategy, but it is just continuous improvement, based on the wave theory. At the beginning, there are few opportunities to grasp, but there are not many trading patterns. Through improvement, there will be more and more opportunities to grasp. In the future, we hope to grasp the buying and selling points more accurately. ”

Balance between risk and return

For risk management, Huang Xiaodong trader has a self-quantitative system: “Assuming the risk that can be borne is 100 points, I expect to occupy 30 points per transaction on average. From the perspective of past transactions, the drawdown should be controlled within 2%, and the expected return of each transaction is also 2%. Therefore, generally speaking, one to two transactions can return to the previous highest point of net value, that is, one or two days. “

This refined risk control keeps his capital curve within a controllable range and avoids the psychological pressure caused by large fluctuations.

Trading plan and market selection

Stable trading plan is the core of Huang Xiaodong’s daily execution. “Yes, I have formulated a trading planand strictly enforce it. ”

In terms of market selection, he prefers the foreign exchange market with strong regularity: “I think it is a bad market if it is too stable and too volatile. The best market should be a market where volatility conforms to the law of volatility and can be summarized. At this point, foreign exchange is better and more regular than stocks and futures markets. In foreign exchange, the larger the trading volume, the better the regularity. ”

From the assessment to full-time: the choice of professionalism

After completing the trading exam for EagleTrader, traders Huang Xiaodong decided to invest in real-time in the real-time management of profit-sharing accounts.

“The biggest gain in taking this exam is to strengthen the effectiveness of his trading strategy. “He believes that the platform’s simulated funds and real profit sharing mechanism give traders the opportunity to test their strategies and transition to professionalization.

At the end of the interview, Huang Xiaodong trader also left a simple and powerful suggestion for all newly registered traders: “Keep calm and believe in your own strategy, don’t be happy when you make a profit, don’t be discouraged when you retreat, do whatever you should do, don’t hesitate or make a rash move. ”

From stock investment to foreign exchange trading, Huang Xiaodong trader has taken his own stable path in three years. He used technical analysis to build a decision-making framework, used light positions and stop losses to maintain the safety of funds, and used review and self-discipline to resist the temptation of luck.

For every trader who is eager to achieve breakthroughs in trading, his experience may be a reminder: strategies can be learned, but persisting in execution and controlling emotions is the key to long-term profit!