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Lead: Trader “Holy Grail” Where?
text | Ningbo Kai Tong International Trade Finance, general manager of the poker community coffee Wu Chuang Chi-hui source (public number) | Wang editor of the Storm | Poker investor, please indicate the source < / i>
traders “Holy Grail”, represents a perfect, ultimate trading patterns.
into the trading field, Looking transaction “Holy Grail” has become every trader’s relentless pursuit.
to technical fundamentals, from programmed to arbitrage operation, from macro to micro business, a variety of technical specifications, and various messages rumors changes, various cycles
K line …… All these research efforts to study, no not very infinite longing to find that the “Holy Grail”, never retracement of the achievement of a high yield curve.
experienced these years of exploration, the “Holy Grail” in the end it exists or not, I had gradually confused.
Here, I take a mathematical way of logical thinking, talk about a few personal insights:
axiom: securities and futures markets is a negative-sum game market.
axioms have become axioms, it is evident that it does not permit the conclusion.
Whenever involved in the securities and futures markets knows that another round of listed companies misappropriating crazy holdings of major shareholders, exchanges, securities companies, futures companies huge fees, government
the stamp duty revenue, which only a few each year to market “loss of blood” several hundred billion dollars.
In the money market continued outflow continued to decrease, determines all the securities and futures market investors can only be a negative-sum game.
The harsh reality, we chose severely restricted in trading patterns.
Second, a Theorem: securities and futures markets on the earnings side in number and amount of funds to be much
less than the loss side
during the negative-sum game, only to lose money trading loss side to the profit side, but both sides must pay various taxes and the cost of the transaction process.
So, not only is the profit side by side to feed loss, in order to provide basic services trade exchanges, securities companies, futures companies and other relevant agencies, must be fundamentally losses sustained by the parties.
Therefore, the party must have a loss far more than the number on the profit side and on the amount of money, securities and futures markets in order to maintain its continuity and survival.
Figuratively speaking, there is one on the grass a wolf and 100 rabbits, rabbit even has its own illness and death, or the occasional eagles and other predators outside intervention (system “bleeding”), but the ecological balance
high probability the system can be maintained.
And if it is 100 wolves this piece of grass on the 100 rabbits, it is also how to play this game go on?
Similarly, a whale of 1000 small fish, although the gap is big on quantity, but also the game play does not go.
securities and futures market did, the winner must be a minority, leeks must be a majority, making a loss and two draws seven is the norm, otherwise Game over.
Theorem II: any major trading patterns mainstream views or necessarily wrong < / p>
certain trading patterns or a point of view once the mainstream market, to take the mode or the number of traders and conform to the view of the amount of money is bound to become the majority party of the market, while a negative market and determine the nature of game
most party losses must be square, so the transaction mode or opinions will necessarily be proved wrong.
Further it can be deduced, main direction of movement of the market, most people must be the most unbearable psychological direction, it must be the most contrary to the direction most people expected.
The market will use all means to prove most people and most of the funds to invest most of the time are wrong.
Error in a negative-sum game pattern, one of the prerequisites market their own survival is the most investment decisions.
CBBC changes in China’s stock market the previous review, we also can be verified: national stocks pomp comes, often the market is crazy to catch the top stage; but the majority of investors turn off the lights noodles, distraught, swear
when the future no longer stocks, often the market has come to the end of the bear market.
Investors tend to see this shift is due to the inexorable law of the market “super main” manipulation.
theorem of three: Perfect absence, the ultimate profit model
p> entering the securities and futures market, traders are all illusions its own ingenuity and diligent efforts, develop its “holy canon” in the field of trade, in order to spin gold from straw, became well-known rivers and lakes.
Unfortunately, two theorems decided not exist such a perfect trading patterns in the market.
Once a transaction mode because a big success, whether it is value investing, technical analysis, quantitative trading system or some kind of “unique Cheats” will inevitably lead to follow suit market participants.
You know, this market is never short of money, lack of model to make money, if they find a way to make money, all the money will be surrounded them, will soon be turned into such transactions
mainstream model of the market, resulting in the failure mode.
see the domestic stock market, Zuozhuang pattern from the 1990s to the value of the investment model after 2005, and then converted after 2010, investment growth mode, and return to the present value of investment patterns, and
“Pareto conversion” phenomenon often happens, all illustrate the cycle of reincarnation mainstream mode.
Even in the mature US market, Buffett often periodically questioned by the financial media collective “Buffett old” and “value investing is dead”, then the value of the investment Taizhanshenwei the next few years, again
He took home the “altar.”
Perhaps you will own “unique Cheats” does not pass outside the inside pass, male – female, never let other people learn, or if you are a super genius, has a godlike intuition
even your secret be made public no one can master, so such transactions always only one person you grasp, it is not possible there is no perfect, ultimate profit model of it?
Well, assuming you are a first-class security technology or that you are a super genius, that so perfect, ultimate profit model annualized rate of return there?
Five times a year?
A hundred times?
Oh, too unrealistic, and that we will be conservative, doubled in a year.
Suppose you started 100,000, double a year, 10 times in 1024, is more than 100 million, 20 years later turn 1000 times, is 1000 million, taking into account the cost of taxes, the domestic futures market has been basically you
destroy it several times a; 30 years later, you estimate the domestic stock market also drained N times, you basically do not need to learn your son this “ancestral secret” was.
Remember Theorems do?
Earnings amount of money parties must also be much smaller than the loss side, a whale of 1000 small yellow croaker is not going to play the game.
So, to maintain a negative-sum game of ecosystems not collapse, unless you limit the size of the funds is restricted, or substantial decline in profitability speed, this way, there is nothing “ultimate” profit model
Theorem IV: Any mode may rely on a profit, there must be a natural defect, thereby preventing the pattern
become the mainstream mode, or that such defective in turn protect the long-term effective this mode.
Select the value of the investment, we must accept the market’s “humiliation” in the Internet stock bubble or create sought after small period of time, being laughed counterparts, abandoned funds entrusted party;
select the trend to follow suit, feeling frustrated in Internet stocks will crash and the collapse of small and medium-create the moment, but also has been criticized as overly aggressive, risk-taking “opportunists”;
select a choppy trade,
buy low sell high, they must watch the market trend never came back first time, to endure loneliness and suffering on the sidelines;
select the trend trading, we must endure the shock stage on both sides suffer slap in the face, the long-term
large fluctuations of floating sideways and profitability;
select the intuition trading day short-term, we must accept the size of funds is not too large, the yield curve unstable and easily influenced by the shortcomings of regulatory policy; p>
is selected or programmed mechanized transaction, it must accept contrary to human nature, transaction of boring, the disadvantage of degradation or failure of the model;
is selected arbitrage model-free or low risk, the quantization mode hedge
, we must accept lower yields, higher threshold amount of money, hardware and software configurations higher defect ……
like wives, There is no perfect person, since fancy her merits, it must
accept her imperfect side.
Side, bearing in mind it is the existence of such defects
transaction is also the case, select a model, they must accept the pattern defect that makes the model will not continue to be the mainstream market
mode, in order to protect the long-term effectiveness.
three extremes meet, the boom is bad.
we look at rankings of fund managers, are the city of the first king of the flag every year, you Changba me play, the previous year’s champion, often lose in the next year or two a mess; the futures market,
from time to time be exposed one after another gangster loss of rumors abroad is also true.
It is this type of cycle finally, the stage of high profit and loss stage, makes each transaction model has a number of devout followers, while not continue to be a
mainstream model of the market.
Perhaps some people will say if you can twenty-three kinds of trading patterns are used interchangeably, always using the most appropriate transaction model happens to the current stage of the vagaries of the market, it would mean that disguise realization
a perfect deal?
Indeed, some extraordinary ability to predict or very good luck, the flexibility to convert various trading patterns, over a period of time repeatedly Tazhun rhythm of the market, get a lot of money income, but in the longer
Tazhun sustained rhythm of the market within the time who has not yet been found, but also impossible!
because such a profit rate, which is the size of funds will eventually grow to the point where the threat of the entire system.
Moreover, small boat U-turn, too much money when you scale, how maneuvers conversion?
When understand it all, placed in the road in front of us, seems to only give up the pursuit of perfection, the ultimate trading patterns in favor of an anachronism, in accordance with its own character,
the nature of funds and other conditions to select an imperfect trading patterns, enjoy the glory and profit model brought to bear losses and humiliation of the model will inevitably produce.
Perhaps the only way to maintain market balance, consistent with the balance of yin and yang reason heavens and the earth.
Or maybe this is the real “Holy Grail.”