6 months burst 4 times, after experiencing the most difficult time of trading relying on money management I got back on my feet!
trading six months to burst four times, cashbackforexbtc finally through the harness theory, Kellys formula to wake up, th East forex cashback is when Eastforexcashback really began to understand the meaning of forexcashbackcalculator management I have long coveted the stock market futures market and the currency market, but has been suffering from their own hands no money, and then finally have the first money into the market since July last year, now it has been half a year, I lost a total of $ 2000 recently a series of enlightened feelings Let me feel the need to record my psychological activities, relative to what I get, I think it has been quite worth an input-output ratio of these six months, I have been using mini-account operations, burst four times in the process, I experienced a variety of violent psychological changes, greed, fear and uncertainty, a variety of ugly side of human nature was exposed to the fullest I also became a crazy I also became a crazy technical researcher, frantically collecting all kinds of information, researching all kinds of trading systems and indicators, successively tried the mean, RSI, woodiesCCI system, KDJ, Bollinger Bands and Japanese candlestick technology, etc., and also tried to write a lot of automatic trading programs to test various strategies, of course, the results are just like what various veterans of the currency market said, is bound to lose money after four or five months of trading, I began to I thought I was smarter than everyone else, so I didnt listen to the advice of the old hands, I thought I could find the perfect system and use it to make a profit, so I used very high leverage and overtraded, people said I was crazy, but I myself I didnt think so at all because I thought I was smarter than everyone else. So, I didnt escape the prophecy at all and bigger and bigger losses followed in the first few weeks, I went through the fourth $250 up to $1200 and then straight to 0. The long term losses made me numb to losing money and my mental capacity was greatly increased. When I realized cashback forex I could never find a perfect way to predict the market, the concept of money management began to be really understood by me So I began to frantically search for things related to money management and trading philosophy I saw these days, the feeling of enlightenment reached a climax, that is, the harness theory as well as the Kelly formula Equivalent harness theory: just like the legendary Arabian pirates gambling, each bet if If you lose, then the next time you double the bet, so that until you win so that, as long as you win once, the previous book will be back, and then the bet back to a minimum so that the premise is that you must have an infinite amount of money a variation of the equivalence harness theory is generally do not understand the strategy of money management people such as $ 1000 capital, after a loss of $ 100, the next single bet how much? Many people also bet $100, so he actually only has $900 left, that is, he bets the proportion of the overall capital increased, so he attempts to win the next time to fully recover his capital when he wins, the next bet may be only $50, that is, after winning in order to preserve profits, began to use small bets betting inverse equivalence harnessing theory: each bet, are strictly under a fixed proportion of the remaining funds In this way, assuming that the money is infinitely divisible, then he can lose countless times, because the day to take its half, the inexhaustible but, after winning money, but still according to this fixed proportion of bets, that is, the more money won, the larger the bets harness theory is that, in the ideal case, the first, that is, equivalence harness theory, is able to make money, the ideal case, that is, you have an infinite amount of money; and We cannot have an infinite amount of money, and so to make money steadily, you must use the inverse equivalence harness theory But the nature of human nature is to follow the equivalence harness strategy To further illustrate this, here is another mention of the gamblers loss theorem The ideal gambler, that is, the gambler who has no profit target, will lose all his money sooner or later, because he does not know when to stop, but he still has a finite amount of money, so he must have probability of touching this bottom line of all his money, once touched, he will lose it all, there will be no bet to continue gambling Notice that the essence of the gamblers loss theorem is that in the direction of losing money, he has a bottom line, once his total money touches this bottom line, he will quit the game For the coin toss game, the probability of winning how much money and the probability of losing how much money is the same Since the gambler does not know to quit, there will always be a day The total amount of money reaches the opposite number of his winning money when his time of death comes and the reason why the inverse equivalence harness theory can be stable and profitable is because he reverses the direction of this bottom line and puts it on the winning side, while letting the losing one take half of the day and never exhausted if we always bet in equal ratios, that way, we can never lose all our money and we can gamble indefinitely then, since we can gamble on indefinitely, then, the probability of winning a billionaire, no matter how small, as long as he is positive, then there must be a day to reach! This is the mathematical theory of money management that supports this deeper elaboration, which is the Kelly formula So, under the inverse equivalence harnessing strategy, what percent of each bet can achieve the fastest profit? Answer: K=W-(1-W)/R, where K is the percentage of the total money placed each time, W is the winning percentage of the strategy, R is the odds of placing a bet in a coin toss game, W=0.5, R=2, then K=0.5-(1-0.5)/2=0.25 That is, in a coin toss game, as long as you put in a quarter of your total money each time and always play in compliance with these odds. Then, you will become a billionaire in the fastest rate of the foreign exchange market and futures market? We quote the base equation of the Kelly formula: K = (W*R-1)/(R-1), where the definition of K, W, R as above So, we found that there is a basic premise of profitability, that is, the win rate multiplied by the odds, the result must be greater than 1, otherwise it is impossible to profit in any case throw coin game W*R = 1, it happens that the expectation is flat but since we can never lose all, and we always So, we can choose to stop when we make $100 million, and become a billionaire is still possible according to the Kelly formula of the basic equation to consider the foreign exchange market and futures market, assuming that the winning rate of each single is W = 0.5, the ratio of each single stop-win and stop-loss is 2:1, that is, the odds R = 3 so that, according to Kellys basic equation, K = (0.5 * 3-1) / (3-1) = 25%, that is, each single position settings, need to reach 25% of the total funds when the optimal solution if the stop-loss and stop-win ratio is 3:1, then the odds R = 4, the win rate W = 0.4, K = (0.4 * 4-1) / (4-1) = 20%; win rate W = 0.3, the odds remain the same, K = (0.3 * 4-1) / (4-1) = 6.7% See here, I think you should understand why countless veterans of the currency and futures markets tell us to invest 10%-20% of our capital each time, and set the ratio of stop win and stop loss to 2:1 and 3:1, so that even if your win rate is 40% or even 30%, you can be stable and profitable! See here, you may say, if its so simple, why do 90% of people lose money inside the stock market, currency and futures markets? Note that the Kelly formula only strategic guidance, and does not have operational significance in the Kelly formula, the only value that can affect the W win rate according to the Kelly formula and harness theory, the win rate is high, as long as it is not 100%, then if you bet in accordance with the equivalence harness strategy, will lose money sooner or later and the direct result of human nature is the equivalence harness strategy, so the vast majority of people in the value of investment is losing money! Only the strict implementation of the inverse equivalence strategy can and must be able to stable profits and the inverse equivalence strategy is against the nature of human nature, because it allows you to reduce the bet when you lose money and increase the bet when you win money, which is the opposite of human nature greed and fear a fatal nature of man is: too much pursuit of certainty, if there is no certainty, then people will feel fear, which directly leads to Profitable time to reduce the stakes while losing money, people are reluctant to admit defeat, which leads to losses instead of increasing the stakes Speaking of which, I think you should understand why it is said that technology accounts for only 20%, while money management accounts for 80% because good money management, strict adherence to trading discipline, such as the implementation of the Kelly formula itself, and trading technology, is only the Kelly formula inside a W value only the W Some large and some small, in fact, is irrelevant, as long as the product of W and R is greater than 1, then you will be able to stabilize profits! And W value, according to the previous calculation, even as long as 30% of the winning rate can be stable profit, 30% of the winning rate, which is how low a value ah! Countless beginners, the reason for the detour, in addition to their intuition that they can find a win rate W = 100% of the strategy, they are not able to control their greed and fear when implementing the Kelly formula, and thus eventually make their own use of the equivalent harness strategy a master said that trading is divided into five stages the second stage, which is how I have been for the past six months, which is the most difficult, the stage length It varies from person to person, as little as 1 year, as much as 10 years fourth stage to start making money, and is geometric money my current stage, is at the end of the second stage I hope to this log, as I kill the second stage of the first gun, continue to move forward in the thorny road of investment