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When it comes to determining the success or failure of stock investment, there are mainly two points.

The first one is investment logic.

Investment logic is easy to understand.

We have a reason for buying and selling stocks, why we buy and why we sell.

Why choose this stock, why we think it will rise.

What is needed is our ability to think logically.

The rise is due to the hype of the subject, because the performance is good, because the funds have entered, these so-called reasons are the logic of investment, which can also be called the logic of trading.

Logic, in the mind, can be said to be a feedback of cognition.

How much you understand the market determines whether your investment logic is clear and whether you can seize the opportunities in the market.

Logic is more like the paper of talking about the war on paper.He is useful, but without practical experience, this logic will ultimately be difficult to help us win the battle.

Of course, there is one point that needs to be particularly clarified here.

Investment logic, in the long-term investment, is far superior to trading ability, because the extension of the cycle enhances the effectiveness of the logic, thereby ignoring the impact of trading details on the investment results.

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That is to say, if you plan to make long-term investments, investment logic is far superior to trading ability.

The second is trading ability.

The importance of trading ability for ordinary retail investors is far greater than investment logic.

Because most of the retail investors are engaged in medium and short-term trading.

Some retail investors often mention that their trading mentality is not good and they often make mistakes.

In fact, trading mentality is an important part of trading ability.

Why professional traders are less likely to make mistakes, because they have a better trading mentality, can effectively grasp the trading rhythm, follow the trading instructions, act according to principles, rather than act on a whim.The ultimate manifestation of trading ability lies in the formulation of trading rules and the implementation capability of the trading system.

In the past two years, the term "quantitative" is often heard. The essence of quantification is to be based on algorithmic trading.

Algorithmic trading can at least defeat more than 80% of retail investors, especially in terms of trading ability.

The lack of trading ability is the main reason why most retail investors lose money.

It's similar to the feelings of retail investors, the stocks they buy are always like elevators, always regretting not selling high, and in the end, they are trapped.

The core of trading ability is not in the trading system, but in the trading mentality, or the execution of trading.

Because the charm of stock trading lies in uncertainty.

We don't know whether it will rise or fall in the next minute, or whether it will rise or fall tomorrow, which will make us look forward to the future.

Everyone, regardless of whether they are in an uptrend or a downtrend, as long as they have positions, will think that it will continue to rise later.

This fluctuation in trading mentality will affect everyone's execution in trading, leading to unnecessary losses.So, the ultimate trading mindset does not require the execution of a trading system to be how impressive, but rather the understanding of trading should be sufficiently in place, allowing the human brain to surpass algorithmic trading.

Perhaps some may argue that human execution power may surpass that of algorithms.

Execution power will not, but adaptability is sufficient. Execution power + adaptability is the key to the 20% who can outperform algorithmic trading, and it is also the true core of trading thinking.

To describe the ultimate trading with a seemingly useless phrase:

Buy when it's time to buy, sell when it's time to sell.

Everyone will surely ask, when should I buy, when should I sell, and how to determine it.

Then this will return to the original question, which is how the trading system is constrained.

It seems like a cycle, with no solution to break through.

The reason there is no solution to break through is because we all long for a system that can let us buy at the lowest point and sell at the highest point.So, many people have strayed in this place, leading to a mistaken understanding of extreme trading.

The so-called extreme trading refers to the execution of trades without hesitation when the market presents a predetermined signal.

Many say that trading should abandon distractions, maintain a good mindset, and so on.

In fact, the root of the essence lies in whether one can understand trading.

Most retail investors do not understand the matter of trading, thinking it is simply buying and selling.

Then, when it comes to buying and selling, they engage in ideological struggles, wondering whether they should buy or sell.

Some with a certain understanding believe that all trades need to be based on established principles, waiting for the market to release buy and sell signals.

But the signals may appear and then disappear, making it easy to be at a loss.

Because the main force will oscillate back and forth to wash the plate, so many trading signals will be distorted, missed, and intermittent.

The extreme of trading is not about right and wrong, but ultimately becomes a kind of probability.We care deeply about every transaction, hoping that every buy and sell is the right decision, because only the right decisions can make money.

If every transaction results in a stop loss, then it must be a loss.

So-called ultimate trading is about how to make corrections while executing trading principles.

For example.

Suppose you make 100 transactions, with 50 profitable and 50 losing.

How can you adjust the profit-taking and stop-loss to obtain profits?

For instance, the original stop loss is 8%, now change the standard to 6%, can it reduce the loss?

Originally, the profit-taking was at 15%, now adjust it to 20%, can it increase the profit-taking revenue, or adjust it to 10%, can it increase the frequency of profit-taking.

Right and wrong in stock trading are bound to happen, but the frequency of right and wrong, and the profits and losses brought by right and wrong are different.

Once you turn trading into a probability of right and wrong, you won't care about the current right and wrong.You will soon discover that trading can become very pure.

If done correctly, you take profits and make money; if done incorrectly, you cut your losses and exit.

Retail investors do not have the ability to speculate on trades because it is not the retail investors who determine the rise and fall, but the main forces.

Even the main forces can make mistakes and may incur losses, not to mention retail investors.

Based on all the signals left by the main forces and their operational trajectories, finding the buying and selling points is what retail investors need to do in trading.

Some people will talk a lot, such as stock selection, timing, and so on.

These are all very important and are part of the trade, but they are not very pure.

Because the real trade will put aside many things, such as the fundamentals, such as the subject matter.

Trading is a signal released by the market, bringing a buying point and a selling point. The more factors that affect the trade, the more complex the trade becomes.Complexity does not make the success rate of a trade higher or lower, but complexity will definitely increase the decision-making cost of trading.

For machines, a complex trade is nothing more than an additional instruction, but for the human brain, the more complex the trade, the more troublesome it is to judge, and the error rate will actually increase.

This is why many investors buy stocks, hoping to buy stocks with good fundamentals, good technical patterns, higher safety, and better cost-effectiveness, but after trying, they find that the situation of losing money is more than the situation of making money.

That is because the trade is not pure, leading to execution deviation, which leads to the emergence of wrong trades.

In the extreme trading thinking, there is no such thing.

After a long talk, many people may not have a good understanding of trading itself, it doesn't matter, everyone is still on the road to understanding trading.