Before entering the market, we knew about the Pareto principle in the trading field. But after studying it for a while, you may enter the market with confidence, thinking that trading is not that difficult and that you are superior and can beat the so-called "housewives." This is the human tendency to overestimate oneself and be overconfident.
After entering the market and making a few trades recklessly, you will soon find yourself with bruises and swelling. Your confidence will be shattered, and you will begin to realize that even though you are a genius, you still need to learn.
So, the two major factions in the speculative field, fundamental and technical, are waiting for you.
During this period, which faction you join is entirely determined by your "destiny." If everyone around you is focused on fundamentals, you will join the fundamental camp; if everyone around you is focused on short-term, technical analysis, you will join the technical camp.
This is almost the inevitable path for every investor and trader.
In these two factions, the vast majority of investors are eager to elevate their skills to the highest level in this field. If you choose fundamental analysis, you should become a person who has a mastery of fundamental analysis. If you study technical analysis, you should push various technical indicators, trading volume, open interest, and other factors to the extreme.
We may experience losses, but the reason for our losses is that our research and development capabilities are not strong enough to prevent them. We will continue to work hard until we have the ability to grasp the overall trend at the highest level and achieve stable profits in the end. This is what most investors pursue.
However, most investors fail in this process because they are surrounded by too much noise that distracts them. After joining the fundamental or technical camp, they often lose control. They often find that their precise control of the future seems a bit self-deceptive, but they only doubt it because everyone around them is doing the same thing.
They occasionally shout in anger because of continuous losses, which is impossible. As a result, they will find a group of people who have made huge profits by accurately predicting the market. They will also feel helpless due to heavy losses. They want to cut their losses, but they find that losses are incurred by stop-losses. Only those who hold on to their losses and make more bets can make big money.
Every time they try to break free, they are dragged back by endless reality. They feel like they cannot predict the market, but countless people are making accurate predictions and making money. They feel that they should cut losses, but reality often does not give them positive feedback. They feel that they should manage their funds, but they find that those who make big money are all making big bets. They think that fundamental analysis is useless, but a bunch of people will tell them, "I make a profit with fundamental analysis!" They believe that technical analysis cannot predict the future, but someone who has made a hundredfold return will tell them that it was all due to the exclusive MACD strategy.
And just when you've struggled and managed to understand a little bit of the logic, you meet a friend who has a funding curve that never retraces and has multiplied his wealth by 8 times in just 2 months, generously sharing his experience with you... Just as you're about to start thinking about how to build a trading system, your wife's friend's boyfriend is hailed as having an unbeatable market sense. It is said that when he places an order, the mountains shake and the heavens weep... True or false, an endless stream of information bombards you. You look at various platform analysis reports every day, listen to the legends of celebrities making huge profits, watch videos on how to analyze and predict, read books, and everyone around you is giving you their "secrets"...
Your mind is filled with countless pieces of knowledge and information. And you, in this ocean of information, piece together your own trading cognition. This cognition contains too much content, and you believe it to be correct, but in reality, you cannot imagine how far it is from the truth.
This is the fundamental difficulty of trading: insight into the truth of trading. The reason why it is difficult to gain insight into the truth of trading is not only because the truth itself is very secretive, but also because you have to complete this task under endless distractions.
Why is this so?
Because trading is a field where the ratio is 28:1 or even 19:1, the vast majority of people, including traders, analysts, professionals, media personnel, and XX personnel, fundamentally misunderstand it. However, they do not know that they are wrong. Most people are likely to sincerely and wholeheartedly share their knowledge, but the key is that their understanding of what is correct is itself wrong. Therefore, the market is filled with endless noise and fallacies. These things are mixed together with the truth, forming an endlessly complex information flow. Here, the halo effect, survivorship bias, and unfalsifiability illusions form a maze, making it difficult for people to find a way out.
For a trader who wants to become a master trader, their only mission is to extract the truth from this endlessly complex information flow through their own experiences and independent thinking. They need to simplify the complex and unravel the threads in the endless flow of information, identify and discard everything that is incorrect, and form their own trading philosophy. Then, resist endless temptations and execute with consistency.
That is why it is said that the core of speculative trading has long been established, and what we need to do is not to innovate, but to understand and execute. This is the difficulty of trading. Therefore, what the trading test is actually testing is a person's trading cognition and understanding of the market. If the cognition is wrong, it is impossible to escape the maze. The trader's entire trading career will be a continuous interweaving of hope and powerlessness, ultimately leading to their downfall. Only when the trading cognition is correct can they truly understand and execute, and eventually reach the end.
As the recent popular saying goes, it also applies to the trading field: you can never earn money beyond your trading knowledge range, unless you rely on luck. But the money earned through luck often ends up being lost due to lack of skill, which is inevitable. Every penny you earn is a manifestation of your trading knowledge, and every penny you lose is due to a deficiency in your understanding of trading.
The biggest fairness in the speculative world lies in the fact that when a trader's controlled funds exceed their trading knowledge, there are 10,000 ways for the uncertain market trend to harvest them until their knowledge and fund curve match. In the long river of time, real trading knowledge is the only answer.
After entering the market and making a few trades recklessly, you will soon find yourself with bruises and swelling. Your confidence will be shattered, and you will begin to realize that even though you are a genius, you still need to learn.
So, the two major factions in the speculative field, fundamental and technical, are waiting for you.
During this period, which faction you join is entirely determined by your "destiny." If everyone around you is focused on fundamentals, you will join the fundamental camp; if everyone around you is focused on short-term, technical analysis, you will join the technical camp.
This is almost the inevitable path for every investor and trader.
In these two factions, the vast majority of investors are eager to elevate their skills to the highest level in this field. If you choose fundamental analysis, you should become a person who has a mastery of fundamental analysis. If you study technical analysis, you should push various technical indicators, trading volume, open interest, and other factors to the extreme.
We may experience losses, but the reason for our losses is that our research and development capabilities are not strong enough to prevent them. We will continue to work hard until we have the ability to grasp the overall trend at the highest level and achieve stable profits in the end. This is what most investors pursue.
However, most investors fail in this process because they are surrounded by too much noise that distracts them. After joining the fundamental or technical camp, they often lose control. They often find that their precise control of the future seems a bit self-deceptive, but they only doubt it because everyone around them is doing the same thing.
They occasionally shout in anger because of continuous losses, which is impossible. As a result, they will find a group of people who have made huge profits by accurately predicting the market. They will also feel helpless due to heavy losses. They want to cut their losses, but they find that losses are incurred by stop-losses. Only those who hold on to their losses and make more bets can make big money.
Every time they try to break free, they are dragged back by endless reality. They feel like they cannot predict the market, but countless people are making accurate predictions and making money. They feel that they should cut losses, but reality often does not give them positive feedback. They feel that they should manage their funds, but they find that those who make big money are all making big bets. They think that fundamental analysis is useless, but a bunch of people will tell them, "I make a profit with fundamental analysis!" They believe that technical analysis cannot predict the future, but someone who has made a hundredfold return will tell them that it was all due to the exclusive MACD strategy.
And just when you've struggled and managed to understand a little bit of the logic, you meet a friend who has a funding curve that never retraces and has multiplied his wealth by 8 times in just 2 months, generously sharing his experience with you... Just as you're about to start thinking about how to build a trading system, your wife's friend's boyfriend is hailed as having an unbeatable market sense. It is said that when he places an order, the mountains shake and the heavens weep... True or false, an endless stream of information bombards you. You look at various platform analysis reports every day, listen to the legends of celebrities making huge profits, watch videos on how to analyze and predict, read books, and everyone around you is giving you their "secrets"...
Your mind is filled with countless pieces of knowledge and information. And you, in this ocean of information, piece together your own trading cognition. This cognition contains too much content, and you believe it to be correct, but in reality, you cannot imagine how far it is from the truth.
This is the fundamental difficulty of trading: insight into the truth of trading. The reason why it is difficult to gain insight into the truth of trading is not only because the truth itself is very secretive, but also because you have to complete this task under endless distractions.
Why is this so?
Because trading is a field where the ratio is 28:1 or even 19:1, the vast majority of people, including traders, analysts, professionals, media personnel, and XX personnel, fundamentally misunderstand it. However, they do not know that they are wrong. Most people are likely to sincerely and wholeheartedly share their knowledge, but the key is that their understanding of what is correct is itself wrong. Therefore, the market is filled with endless noise and fallacies. These things are mixed together with the truth, forming an endlessly complex information flow. Here, the halo effect, survivorship bias, and unfalsifiability illusions form a maze, making it difficult for people to find a way out.
For a trader who wants to become a master trader, their only mission is to extract the truth from this endlessly complex information flow through their own experiences and independent thinking. They need to simplify the complex and unravel the threads in the endless flow of information, identify and discard everything that is incorrect, and form their own trading philosophy. Then, resist endless temptations and execute with consistency.
That is why it is said that the core of speculative trading has long been established, and what we need to do is not to innovate, but to understand and execute. This is the difficulty of trading. Therefore, what the trading test is actually testing is a person's trading cognition and understanding of the market. If the cognition is wrong, it is impossible to escape the maze. The trader's entire trading career will be a continuous interweaving of hope and powerlessness, ultimately leading to their downfall. Only when the trading cognition is correct can they truly understand and execute, and eventually reach the end.
As the recent popular saying goes, it also applies to the trading field: you can never earn money beyond your trading knowledge range, unless you rely on luck. But the money earned through luck often ends up being lost due to lack of skill, which is inevitable. Every penny you earn is a manifestation of your trading knowledge, and every penny you lose is due to a deficiency in your understanding of trading.
The biggest fairness in the speculative world lies in the fact that when a trader's controlled funds exceed their trading knowledge, there are 10,000 ways for the uncertain market trend to harvest them until their knowledge and fund curve match. In the long river of time, real trading knowledge is the only answer.
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