Foreword
I think this book “Out of Illusion, Into Maturity” by Financial Empire should be one of the required introductory readings for traders who do trend trading.
I have recommended this book to many people, but most of them have only expressed their thanks politely, and never had one person excitedly say that this book has helped him a lot. Improved his trading philosophy. So I know that there are a lot of people in the world who lose money for a reason, and it’s hard to change. But anyone who can read this book, can trigger their own independent thinking, so as to reconfigure their trading system, stick with it, has almost understood how trading is a matter of fact.
Of course, from a higher level, is to tell why do trend trading to go through a long and painful loss, has been honing the nature of the heart, until the frank acceptance of losses!
**Maybe you’ll win, maybe you’ll lose, but either way you’ll lose a lot of what’s most precious to you. ** - a line of dialog from the TV series “Sitting on the fence
**To trade is to seek death, not to trade is to wait for death. ** - Financial Empire
Quantitative
The journey
Along the way, from simply looking at indicators ==> using mechanical trading ==> using trading systems ==> encountered “out of the illusion Towards maturity” ==> reconstructing trading concepts ==> began to learn python, using quantitative trading. How many painful reflections and struggles along the way.
In low-frequency quantitative trading, you can only choose, either a long loss and more profit, or a long profit and more loss, can only choose one. How do you choose? In other words, do you want the odds or the win rate?
In fact, if I meet a friend who speculates in stocks, I often ask it this question. What are your odds and your winning percentage? If you can answer, I basically think that you have already started. If you are stumped, or simply avoid talking about it, then I can only assume that it should still be at the stage of not getting started, no matter how old it is.
Odds or Wins?
As soon as you start learning quantitative trading, you will come across this question, do I pick a trend strategy or an oscillator strategy?
Trend strategy backtesting data all the way, all the way seems to be a small loss, on the basis of a few large profits pulled back, if these a few of your trading system did not catch, then it will inevitably be a loss.
Oscillating strategy, all the way seems to keep appearing profit, but the amount is not big, if the black swan in the trading period, then the whole account has the possibility of major losses.
Do you go for the thrill, or the profit?
The book “Get Out” by Financial Empire mainly addresses the issue of overcoming the human mindset if it is harnessed with reason back in the day when there was no quantitative trading.
Good thing there is quantitative trading now. Can no longer suffer from this cruel psychological torture.
Excerpts from the original
Here’s an excerpt from the original article that I really like, which should answer the question nicely. Why trade.
Maybe it’s because I’ve had so much frustration, I’ve really never advised anyone around me to go into trading. Even when many of my peers have recently asked me to teach them to trade stocks, I’ve tried my best to push back and explain to them the downsides of trading. Because I know that the growth of a trader is very painful. It involves fighting against the industry environment, your own instincts, your belief system, and everything else that is inherent in it. I have never believed that anyone can truly learn to trade without experiencing heavy losses**. The truth is, beginners usually make money that the market lends you, and they wait for the market to get even more aggressive when it comes time to collect. It seems that everything in this world can be taught, but only two things can only be felt by yourself. One is falling in love, and the other is making deals. You can’t explain to a child what it feels like to be in love, much less teach him the art of being in love. In fact, trading is no different.
I am convinced that what I have said, **beginners will not understand; even if they understand, they will not believe; even if they believe, they will not implement; even if they implement, they will not insist; even if they insist, they will not be able to willingly stick to the end without experiencing heavy losses before **! In fact, trading is really not complicated, on the contrary, it is surprisingly simple. The problem is that this simplicity is a bit out of the ordinary, and does not conform to normal human instincts and belief systems. The entire contents of this book can be condensed into a few sentences, and I guarantee you’ve heard them all before. In fact, the whole value of this book is to enable people to believe in these simple truths.
I read a survey on the internet about the motives for entering the stock market. The first was to make a profit, the second was to prove one’s ability, and the third was to pursue freedom. Looking back, I did enter the stock market because of these reasons. Ironically, I first had to pay high tuition fees; then I had to be foolish enough to stick to my trading principles; and in the end, I ended up basically living off the land, with no freedom or pride. Today, ten years later, I have to sigh, the end and the original intention is really the opposite of what I had hoped for! I believe that those of my peers who are now in the stock market may one day be able to make a huge fortune, but you will certainly feel that the market is not the same as you first imagined.
When I think back to more than a decade of experience a scene a scene: that countless sleepless nights; that the face of losses racked their brains can not find a way out of the helpless; that destroyed two-thirds of a parent’s lifelong savings of heartache; that the pain of the struggle with instincts; that in order to trade and the loneliness of the group … … , now the heart is still sour. To be honest, I really can’t bear to see my peers around me go through the same kind of pain I once went through, knowing that they are still just some children. I can’t bear to see these lovely hearts, full of childlike innocence, become full of holes and then develop calluses like iron stones. Even so, there is no guarantee that this kind of dedication will be rewarded.Recently, something has changed my perspective. I realized that many of my peers are also depressed and full of stress. Housing prices are skyrocketing, and those of us in our twenties who are about to say goodbye to childhood are really under a lot of pressure. They are all struggling for money in their different industries, and maybe it’s not all smooth sailing in any industry. A psychologist once said that people usually feel that they have put in more effort than others, after all, only they can feel their own effort. It used to be “you can’t get rich without money”, but maybe now it’s “you can’t live without money”. After all, there is no industry that has such a low barrier to entry and such amazing short-term returns as trading.
I suddenly remembered an interesting incident when I was 14 years old. At that time, although my “big account” was still losing money, but one day I made a profit of more than two thousand dollars in the book. It was a parent-teacher conference, and I remember my mom coming to the school before class was over and driving me out the window. At that time I could not suppress the excitement inside, almost the end of the class when I stood up to the window of my mom even gestures, with said told him: “up a piece of four ah! “Now think about it is really funny, but I remember it very clearly. In the next few years, I can’t even beat a loss of 140,000 dollars. What does this mean? At the time I thought trading was a no-brainer, and could I not be excited about earning a few months of an adult’s salary in one day and (as I thought at the time) at no cost? That’s how a beginner’s mind feels about profits.
Ending
The good thing is that there is now quantitative trading that allows us to look at it all from a higher dimension. And machines can be used to make decisions that go against human nature instead of us.
That’s why I’m on the stand QUANTITATIVE TRADING, hoping that this powerful mathematical and engineering tool can help people in a daze out of disillusionment and towards maturity!
