In the financial markets, nine out of ten people can achieve profits, but these are often short-lived, one-time occurrences, and many individuals become trapped in the glory of their past successes, unable to move on.

I have always emphasized that to assess a person's trading ability, one must look at their long-term performance. The ability to consistently and stably profit in the trading market is truly a rare skill, one in ten thousand.

As of this year, 2023, I have been trading for a full 12 years. In the early part of my career, I was constantly in pursuit of high profits and was obsessed with finding trading techniques that could consistently yield high returns, but to no avail, and I suffered many setbacks.

Today, I would like to share how the trading gods are truly forged and discuss the three commonalities among successful traders, which may provide you with some inspiration.

The article is quite lengthy, so I recommend bookmarking it for reading. If you find it valuable, please give the article a like; your appreciation is appreciated.

1. Can making a large profit once make one a trading god?

Many people have shown me their settlement statements, trading records, or recounted the "gods" they've seen in trading, all of whom achieved astonishing results in a very short period, such as gains of 10 times, 20 times, or even 100 times.

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Later, I found that without exception, these individuals gradually faded away after a period of high-profile activity, disappearing from sight.

Did they retire from the trading world after making enough money? No, most of them suffered consecutive heavy losses or even blew up their accounts.

One case that left a particularly deep impression on me involved a trader whose strategy was to add to positions in a rising market, which could lead to continuous doubling of profits when the market cooperated. However, when faced with risky market conditions, they would suffer consecutive account blow-ups.Trend-following and adding to positions is certainly a very good trading logic, but his trading method, details, and position management are all inadequate. His ability to withstand risks is very poor. He will definitely suffer a painful loss when faced with a non-cooperative market. I have emphasized this point to him, but he did not listen.

Later, when I asked him about the situation again, he only said that he encountered a black swan event and lost all his money, and then he stopped trading.

In trading, one must not only look at one-time, short-term profitability but also consider the risk resistance of your trading strategy in the face of black swan events. If you can survive even a black swan, that is the real skill.

Between 2015 and 2017, we experienced the Brexit event, which can be considered a very significant black swan. I will share the review records of my trading system with everyone.

During the Brexit period, the market fluctuated greatly and was influenced by various fundamental news, with the trend going up and down, showing no trend at all.

However, because my trading system adopted a fixed stop-loss amount for money management rules and strictly stopped losses, it controlled the risks and landed safely.

I divided the market records during the Brexit period into three tables for explanation.

The trading system is at the hourly level, but to show clearly, I took screenshots of the daily K-line. The system trades in waves, using a fixed stop-loss amount for money management rules, with a profit-to-loss ratio of 2:1.

The overall trend is stable and volatile, with a total of 20 trades, 15 correct and 5 wrong, with a principal of $100,000, a single stop-loss of 1%, and a profit-to-loss ratio of 2:1. This stage made a profit of $25,000.

During the Brexit period, the market trend fluctuated greatly, and the regularity obviously became worse. After the large fluctuations, the energy was released, and the market entered a small range of consolidation and volatility, where the trading system did not perform well.During this phase, there were a total of 19 trades, with 5 correct and 14 incorrect, starting with a principal of $100,000, with a stop-loss of 1% per trade, and a profit-to-loss ratio of 2:1. This stage resulted in a loss of $4,000.

Although there was a loss during this phase, it was controllable.

The trend gradually returned to a stable and smooth state similar to that of 2015, with a total of 21 trading opportunities, 10 correct and 11 incorrect, starting with a principal of $100,000, with a stop-loss of 1% per trade, and a profit-to-loss ratio of 2:1. This stage resulted in a profit of $9,000.

During the period of the black swan event, the market fluctuated violently, and there were even consecutive stop-losses. However, due to a stop-loss of 1% per trade, the actual drawdown was only 4%, and the risk was strictly controlled.

Some may say that you are always thinking about losses; shouldn't you be thinking about how to make profits?

Old traders always prioritize risk first, then consider profits. Without controlling risk, what qualifications do you have to make profits?

In my early years of trading, I suffered losses because the stop-loss positions were not clear, nor were they executed properly, and the position management was chaotic, leading to consistent large losses and small profits, and eventually, the money was gone.

Later, when I improved risk control and clearly implemented the rules of capital management, I found that I could safely weather all risk events, control the overall drawdown, and thus achieve long-term profitability.

Without strong risk control during this black swan period, many people would have been caught in the cycle of buying high and selling low, resulting in significant losses. This is the importance of a trading system and risk control.

2. What common traits do trading experts have?Since I started writing articles online, I have interacted with tens of thousands of traders, and the number of those who can truly achieve stable profits could probably be counted on both hands.

However, during the communication process, I found that these individuals share a common set of characteristics, and it is very pleasant to chat with them. Basically, their views and understanding of trading are consistent. I have summarized a few points to share with you.

Firstly, their trading skills are all in place.

In terms of professional knowledge, our communication is very smooth. For example, when I ask them about the profitability of their trading strategies, they won't give me a short-term result, but will tell me:

What kinds of products their trading system mainly deals with, what types of market conditions they trade, how many times they trade annually, what is the longest time period for order positions, how many consecutive losses they can encounter during a downturn, and what the most difficult problem to solve is, etc.

Moreover, there is a striking similarity in that everyone's expectations for profits are not very high. They first focus on risk issues, especially the worst performance during the downturn of the trading strategy, because this is a great test of the detailed processing of the trading system and the technology of position management.

In addition, the most basic theoretical knowledge is a given, and there will be no mistakes in their understanding of technical indicators, the market, and the fundamentals.

Secondly, they have a strong self-awareness and a stable trading mentality.

None of us, who can truly achieve stable profits, think of ourselves as particularly great. On the contrary, we all feel insignificant in the face of the vast market.

We know how much effort we have put in to make a living from trading. Our goal is very clear, which is to make money, not to enjoy the trading process. Our needs are also very simple; we are content with the profits we can obtain and never greedily seek more.I am also aware of the flaws in my own human nature and my imperfections. Although facing one's shortcomings can be quite painful, I never shy away from them.

In fact, many people are not wrong about the market trends, nor do they fail to find the right entry points. Instead, it is during the actual trading process that a minor fluctuation can throw them off balance, disrupting their original trading plan and leading to a complete loss.

Afterward, when they see the market moving in line with their expectations and look at their accounts that have made wrong moves, they feel extremely distressed, hating themselves for not being more disciplined and not being able to control their actions.

Let me offer some advice to everyone.

Your trading mentality largely determines your trading outcomes, and your trading skills, in turn, greatly influence your trading mentality.

How should we understand this statement? Let me give you an example.

When you have thoroughly reviewed your trading strategy, knowing every detail of it and the maximum risk value, you can remain steady during trading, not panic, and thus increase the likelihood of making a profit.

It's similar to preparing for an exam where you have practiced extensively. When the exam comes, you won't panic. Even if you might encounter 10% of the questions that you don't know, if you have mastered 90%, you can still pass the exam. It's the same principle.

Additionally, the position size can greatly affect your trading mentality. I suggest that everyone starts with a small position. Once you are certain that your trading strategy can be executed flawlessly over a long period and is profitable, then gradually increase the position size.

The so-called trading confidence and trading faith are honed step by step in this manner. There are no shortcuts; they are built up over time and through experience.Many traders who have failed have confided in me, expressing that they feel very painful, having accomplished nothing during the past period, and having lost a lot of money.

In fact, sometimes I feel that failure is not an absolutely wrong thing. Falling into pitfalls is also paying tuition to the market. In this world, no matter which path you take, there is no easy and profitable road.

If your trading has experienced many failures, you must summarize the mistakes and cannot let the past errors be meaningless.

I suggest that every trader keeps their own trading records and summarizes the mistakes, regularly sorting out all the problems that arise in trading. Correct each of these problems one by one.

This is also like playing a game. There will be many levels on the way, and each stage has different difficulties. If you want to pass the game, you have to keep discovering difficulties, overcoming them, and when you finally pass, you will find that you have a clear view of the entire game, and those difficulties are nothing much.

Many times, the difference between people lies in their mentality and behavior when facing difficulties. No matter what industry, as long as you can keep calm, have the courage to face yourself, and correct yourself, you are likely to do well, and trading is the same.

Thirdly, have the right trading values.

Some people may find it strange that there is also a concept of values in trading?

Buddhism says that appearances are created by the mind. The values in trading are our understanding of trading, the philosophy of trading.

Just like the values in your life, if your values are correct, you have a positive attitude towards life, a kind character, a broad mind, and work and live diligently and seriously, then you are likely to live a good life.In trading, it is the same; when we have a correct understanding of market trends, reasonable expectations for the return cycle, and the right attitude towards the rate of return, our trading outcomes won't be too bad either.

I've noticed that in conversations with those who consistently make profits, everyone invariably talks about "profits and losses come from the same source."

We focus on the probability of trades, the consistency of trading, and strict money management. We can stop losses when we're wrong and hold onto profits when we're right, eventually accumulating profits gradually through a balance of success rate and profit-to-loss ratio.

The idea of getting rich overnight is far, far away from us.

I've been recommending a book called "The Clarity of Insight," which is also my favorite book on trading psychology. Its author is a successful trader and a graduate student in philosophy, with a deep interpretation of trading philosophy. If you're interested, you can look for it and read it yourself.

Finally, I'll end today's topic with a quote from Inamori Kazuo about masters: "So-called celebrities and masters in all walks of life, before they reach this level, they all work diligently and tirelessly."

I wish you all smooth trading!