Investing and trading, respecting cycles and boundaries

Investment and trading markets have never had permanent winners, nor permanent losers!

All profits and losses are phase-based cyclical results. Recognizing the true market laws and understanding your own trading boundaries are essential for long-term survival.

1: Every investor and trader’s system comes with its own adaptable boundaries. Any trading logic (short-term / swing, trend-following / counter-trend, fundamental / technical) has its suitable environment: strategies that perform well in choppy markets, while trending markets tend to cause continuous losses; following trends can be profitable, but during sideways consolidation phases, stop-losses will recur. No one’s trading method can fully cover all market conditions—bull, bear, sideways, rapid rise and fall. All strategies are only suitable for phase-specific market environments.

2: Current profits and losses are just phase results, not a permanent reflection of a trader’s ability, including yours and mine. Those who are consistently profitable now are simply in a market phase that matches their strategy; those who are consistently losing are just in a phase that contradicts their system, not permanently incapable. Market conditions are never static; market styles (volatility, main players’ tactics, capital preferences) cycle periodically.

3: Market rotation = identity of profit and loss shifts. When market styles change, the profit strategies that once suited the environment become disadvantaged, and those who previously suffered losses for misjudging the market find themselves in alignment with the current trading logic. The profitable group turns into losers, and the losing group turns profitable, reversing profit and loss identities naturally.

Suggestions:

1: Some excel in US stocks, others in mainstream cryptocurrencies, and some in altcoins! Some focus on technical analysis, others on fundamentals, and some on news. First, know what you are good at and what you are not. Deepen your expertise in your strengths, avoid your weaknesses, and if the market doesn’t fit your strategy, it’s time to rest.

2: Beginners should spend more time learning rather than frequently placing trades. If your fundamentals are weak, opening more trades won’t help; it will only make you more chaotic. Building a solid foundation helps protect your capital and prevents liquidation. If you frequently suffer heavy losses and your mindset becomes unstable, losing your capital, even if the market later aligns with your strategy, you won’t have the chips to turn the situation around.

3: There is no perfect system that can cover the entire cycle. Experienced traders should continuously optimize and iterate their trading systems! Rigidly sticking to one system is not advisable. Strictly following a trading system can help avoid emotional trading, but a fixed system cannot adapt to all market rotations.

If conditions permit, avoid rigidly sticking to a single strategy. Adjust risk control, entry conditions, and position management as the market shifts to broaden your strategy’s adaptability.

If conditions don’t permit, stick to strategies that help you reduce losses.

We go through many experiences in trading! Geopolitical issues, macroeconomic policies, institutional and investment bank opinions, stock market earnings reports, technical changes, fundamental shifts in the market—all these influence the market’s nerves. Being flexible with your strategies is the best approach.

Risk control always comes first!

Trading cannot eliminate all uncertainties; it can only avoid known high-risk uncertainties and safeguard controllable, certain opportunities.

For example: Trump is about to speak tonight, but we don’t know what he will say—that’s uncertainty. During this phase, you should give up trading and choose to rest.

We know Japan’s interest rate decision will be announced soon, and we also know that a rate hike in Japan could lead to a global carry trade unwind and capital flow back into Japan! But we don’t know if Japan will actually raise rates, so wait until the rate decision is announced before trading—that’s certainty.

If possible, practice yourself to improve experience.

Don’t think about finding someone to signal trades or follow others’ signals! Even if they have rich experience, it may not be useful to you. Even if it is, their ten years of experience from pitfalls won’t be easily shared with you.