ET Interview | Making correct judgments but insisting on short positions is the risk control logic of mature traders

Some people think that trading relies on prediction ability; some people think that trading relies on high winning rate strategies. But for Han Wenhui, who has been trading for ten years, what really determines whether a trader can stay in the market for a long time is managing risks.

Ten years ago, he accidentally came into contact with the precious metals and foreign exchange markets because of debts. Initially, he hoped to improve his income through trading; now, trading has become his full-time career. These ten years of market experience have also changed his trading philosophy a lot. In this issue, let’s take a look at Han Wenhui’s trading world with EagleTrader.

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Therefore, he has controlled the risk of a single transaction to about 1% of the account funds for a long time. Even if you encounter a trend where technical analysis and fundamental analysis resonate and you are best at it, you will only moderately increase the risk to 2%.

In the eyes of many traders, adding positions means higher returns; but in Han Wenhui’s view, adding positions first means greater risks. A truly mature trader will not enlarge the position at will just because a market trend seems “very sure”.

For this reason, when asked how he would deal with a large loss after heavy trading, his answer was very straightforward: “This is not an operation that a mature trader should perform.”

Because once the risk is out of control, no matter how good the trading system is, it may lose its meaning due to emotional fluctuations.

Really stable profitability depends on execution ability

When it comes to the key to long-term stable profitability, Han Wenhui does not attribute the answer to a certain strategy, but emphasizes fund management and execution capabilities.

He has always used trend following strategies and has great trust in his trading system. However, he believes that no strategy can always adapt to the market, and no matter how mature the trading system is, it needs to be continuously optimized as the market changes.

Rather than constantly looking for new methods, he pays more attention to how to stably execute his own trading system.system.

In his view, trading consistency is not just about always using the same set of strategies, but also about keeping position management, trading cycles, position holding time and execution discipline consistent, and not changing trading principles at will because of temporary profits and losses.

Once he finds that his operation deviates from the system, he will immediately stop and re-examine himself, rather than rushing to make up for the previous mistake with the next transaction.

Because what really determines long-term returns is not one or two transactions, but long-term and stable execution capabilities.

Luck can make money, but it cannot make money in the long term

In the interview, Han Wenhui mentioned a sentence that impressed him: “The money earned by luck will still be returned to the market.”

Therefore, no matter how tempting the market is, he always insists on trading according to the system rules and participating in the market with fixed risks, rather than constantly adding positions just because his judgment is correct once.

In his view, trading is not a bet, but a long-term business.

Every stop loss is an operating cost, and every time you strictly implement a trading plan, you are accumulating long-term advantages for your account.

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The assessment provided a complete set of simulated funds and rules system, allowing him to re-evaluate his profitability and re-examine the risk exposure in the entire trading system.

Under fixed rules, every transaction and every retracement can more truly test your own fund management, risk control and execution capabilities.

This is exactly the significance of EagleTrader’s proprietary trading assessment. It not only focuses on whether traders can make profits, but also focuses on whether they have the risk management, trading discipline and system execution capabilities required for long-term stable trading, allowing traders to continuously verify and improve their trading systems during the assessment process.

At the end of the interview, Han Wenhui shared a sentence: “Operating trading is like running a business.”

A truly mature trader will not overestimate his own abilities, nor will he have high expectations for any transaction. What they are more concerned about is adhering to their own trading principles and allowing the trading system to continue to create value under the premise of controllable risks.