Crazy "roller coaster" week. How you doing?

Every trader should ask yourself after the roller coaster trend of the past week, is your account still healthy? Are you okay? Are you ready for your next decision?

1. Opportunity lays in risks and is from risks

The financial market has recently been greatly affected by the coronavirus. Stock index, gold, crude oil and other assets have fluctuated violently. Dangers and opportunities are intertwined. Human nature is also vividly reflected by entry and closed orders.

Learning and experience are different. Some people think that investment is a science, others consider it an art, and certainly some people think that investment depends on luck. But most people can agree that investment opportunities are inevitable from risks, and in risks.

The U.S. stock market has been in a bull market for more than ten years, with more buying orders increasing. Most of the buying orders overweight at the bottom of the past decade. Even if the new entry is believed to be higher than the highest one, it may not be daring to buy from the investment perspective. Rather, it is a buying opportunity waiting for market adjustment. And in the past ten years, there are not a few people who short U.S. stocks. Especially in recent years, as long as they make a high, there are short sentiments, and they have come up with various fundamental analysis and historical trends to tell the story. This has created a situation where buyers consider buying too expensive, and bears want to be empty yet helpless. Both sides believe that adjustments in trends are inevitable with the right time and magnitude.

The coronavirus outbreak is an accidental factor, and it has become the biggest variable in the US stock market. It can even affect the political and economic structure of the world. How many people can see it in advance? But this variable seems to give both the long and short sides what they want.

2. The essence of investment is forward-looking risk management

The essence of investment is to manage risks prospectively, not simply to avoid risks or simply diversify risks. Looking at the Dow's daily unilateral amplitude of nearly a thousand points, and back and forth several times during the day. What do people who keep eyes on such asset think?

It's impossible to stay completely put, but how to participate? Game over if you lose; Earning a bit doesn't seem much a fun. How to participate in the safest is obviously related to the understanding of risks, in other words what is the strategy of investors to participate in trading?

3. How to Buy good assets with cheap price?

The strategy is "how to buy good assets with cheap price", which means "the future environment is conducive to this asset", which can be shown by the level of win rate, and cheap price means " while making decision, the win ratio versus lose one (referred to as the profit-loss ratio). Any investment strategy is a combination of win rate and profit-loss ratio. Regardless of investment or speculation, investors should choose different ones according to their own risk preferences and resources combination.

The other key derived from the corresponding strategy is patience. The first element of investment is patience. Be patient and wait for the planned price to arrive. You cannot be confused by short-term fluctuations.

In the environment of such ups and downs, first of all, we should ignore the small support/resistance in the violent fluctuations, and instead focus on the positions with a longer time and greater effect, and hereby formulate the entry and exit plans. And don't change your mind at will, but maintain continuity of strategy. Based on your own habits, if you can't look out for too many varieties, you should pay close attention to just one, and the position and stop loss should be reasonable.

4. Successful traders must always have cash in their hands

Successful traders must always have cash in their hands, waiting for the opportunity to be fully mature. The market opportunities are endless. In case of missed opportunities, just wait again. Don't worry, the next good opportunity is coming. Don't chase the lost opportunity.

Rome was not built in a day. If you still don’t understand the charts, you don’t know where the market risks lie, you don’t know how to plan and execute decisively, and you don’t recognize which opportunities are yours, then you need to take the time to learn. That’s also why we check the key component models and performance tests when we buy a few hundred dollars mobile phone.

At the same time, mature investors always know where their ability boundaries are, because it is difficult for you to earn a portion of your profits beyond your cognition, but it is easy to risk and lose more.

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