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2024/10

The foundation of a trader's success

In trading, long-term strategies have their specific logic, while short-term trading requires different techniques. The key is for speculators to choose a method that best suits their personality and the specific market conditions, establishing a fundamental trading model for themselves.

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However, no matter how good a theory or tool is, it always has another side. There is no perfect trading theory or tool in the world, and every trading model has its strengths and weaknesses. There is no method in the market that can predict future changes with 100% accuracy.

Thus, the prerequisite for correctly using any trading theory or tool is that the trader must have the ability to think dialectically, which is the foundation of a trader’s success. Otherwise, even the best sword in the wrong hands is just a piece of scrap metal, while scrap metal in the right hands can become a valuable sword. At the same time, even when a trader believes they have absolute confidence and certainty in a trade, they should still prepare for risk control to prevent significant losses from misjudgments.

Trading skills and knowledge can be learned, and market experience can be accumulated. But more importantly, cultivating a mature mindset and putting it into action quickly is a long process of practice, pursuit, and understanding. As a trader, you face significant gains and losses daily, and the responsibility and pressure are immense. From a rational perspective, it’s normal to experience wins and losses, and failed or losing trades are part of the path to success. However, since humans are not omnipotent, achieving a state of being indifferent to external gains or losses and remaining calm amidst the daily ups and downs is extremely difficult.

As the ancient saying goes, “A sage has emotions but is not burdened by them.” This means that sages are not without emotions, but they can control them, not letting emotions become the deciding factor in their actions. As a trader, it’s natural to feel emotional highs and lows due to gains and losses. However, whether a trade outcome is good or bad, the next trade must be handled based on strategy, not emotions. Controlling emotions and desires is no easy task in a world full of temptations, even though it’s easy to say.

Therefore, I believe that speculators are not merely “scholars” or “wise men” but are “doers” among scholars and “endurers” among the wise. Action rather than words, and practice rather than theory, is the essential characteristic of a professional speculator. In a sense, modern financial markets’ professional speculators cannot be trained through traditional academic systems. Even the world’s famous universities do not have majors specifically for speculation.

Modern higher education emphasizes intellectual training too much, and the distant teacher-student relationships do not meet the educational requirements for nurturing top-level professional speculators. In my imagination, the ancient Chinese tradition of learning calligraphy, painting, and martial arts, where master-apprentice relationships are emphasized, could be a model for cultivating professional speculators.

I greatly admire philosophical thinking. Western philosophy’s epistemology is valuable for understanding and grasping market movements, while Eastern philosophy enhances a speculator’s psychological development and life outlook, helping maintain a calm mind in the face of market volatility. The principles of tea ceremony and Japanese Bushido, both embodying stillness and movement, provide excellent interpretations of the truth in speculation and life.

In the training of a warrior, knowledge and intellectual training are undoubtedly important, but more critical is the cultivation of attitude, character, and willpower. This includes a spirit that is detached from worldly gains, unaffected by fame and fortune, calm yet decisive, courageous in sacrifice, and able to endure pain. These qualities are precisely the personality traits that a typical trader must possess.

Successful trading is not a collective intellectual endeavor but more like an individual psychological battle for the speculator. This solitude manifests in the long journey of learning to trade, which is like walking alone at night in an endless wilderness with no end in sight. Analyzing and contemplating market fluctuations brings the speculator feelings of helplessness and pain in the face of future uncertainties. The decisions and operations made on the spot often conceal the speculator’s deep fear of a black hole and concern for their safety.

A person who cannot tolerate solitude, lacks independence, blindly follows others, or lacks independent thinking cannot become a top speculator. In terms of the speculator’s internal psychological cultivation and spiritual transcendence, ancient Eastern culture may serve as a source of wisdom for self-salvation. The spiritual qualities embedded in Eastern culture, such as the tea ceremony, might help traders remain clear-headed and rational in the market.

“The essence of the tea ceremony lies in inner peace, clarity of emotions, and serene behavior—undoubtedly the prerequisites for correct thinking and proper emotional control. A quiet room, secluded from the noise of the crowd, inherently invites one’s thoughts to transcend the mundane world.”

The spiritual world of a great speculator resonates with philosophy. Don’t believe me? Just listen to the following quote from the master speculator Stanley Kroll, which perfectly applies the spirit of the tea ceremony to market trading:

“When I find myself confused and disturbed by the apparent contradictions in various statements and post-event declarations or analyses, I isolate myself from these so-called news items. Instead, I focus on detailed and effective technical analysis, seeking order in the chaos. This period of isolation, far from distractions and well-intentioned advisors, seems to correlate with clearer, higher-quality analysis.”

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Note: Trading financial products involves high risks and may not be suitable for all investors. Please ensure you fully understand the risks and implement appropriate management measures.

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