Advanced Quantitative Trading: The Road to Becoming an Excellent Programmed Trader

The true secret to successful trading lies in the traders themselves, which has been widely recognized by the market.

This is where newcomers to the market often ask how to become a successful systematic trader. First of all, it should be noted that the content summarized in this article has been mentioned repeatedly by many market participants, and now it is recommended again, which may be regarded as a cliché. Experts who hope to see new ideas may be disappointed and may wish to skip this article.

Reviewing the experience of successful traders in domestic and foreign markets, it can be mainly attributed to nine factors. Beginners need to overcome these difficulties one by one in order to become a first-class system trader. The following is a brief introduction to these nine factors, hoping to inspire beginners.

First, basic analysis; the proportion accounts for 1%

Fundamental analysis mainly involves relevant knowledge learned in university, but it is not enough. It also needs to be studied in depth for specific varieties. For example, trading soybean varieties requires an understanding of the basic situation of soybean markets at home and abroad. Although fundamental analysis is of limited use to systematic traders in real-time decision-making, fundamental information often has an impact on the operation of large funds.

One situation is that when a trader is conducting large-scale capital operations, if he lacks a grasp of the fundamentals of the variety, he will inevitably feel unreliable and bear unnecessary psychological pressure. Another situation is that investors may be disturbed by fundamental information, which may affect the operation. In addition, the trader's supervisor may sometimes interfere in decision-making due to fundamental information.

I apologise for limiting the importance of fundamental analysis to 1 per cent, perhaps to the discomfort of some of my colleagues. But that does not negate its value. I personally have great respect for these professionals because I am a pure techie and know very little about fundamental analysis. In my opinion, fundamental analysis work is essential to the big money operating room.

Second, technical analysis; the proportion accounts for 2%

Technical analysis covers a variety of theories, indicators and mathematical models. It is not only necessary to master the results of predecessors, but also to reach the level of creating their own theories and indicators. At this stage, beginners are often keen to find novel and fancy technical tools and pursue new ideas.

At this time, beginners often don't know why, and need a lot of reading and long-term study. The more books you read, the thicker you read; there are not many people who can understand the true meaning of technical analysis and create their own system in actual combat.

This stage requires not only intelligence and talent, but also the spirit of hard work.

III. Market theory; share of 15%

Not only do you need to master the market theories of your predecessors, but you also need to establish your own theoretical framework. At this time, the fewer books you read, the thinner you read. Fewer people can understand the true meaning of the market and create their own theories in actual combat. Correct market theory is the cornerstone of success.

This stage requires intelligence, talent, understanding, and a reasonable knowledge structure, as well as hard study.

IV. Investment philosophy; proportion 5%

Investment philosophy is the application of market theory. If market theory is compared to nuclear physics, investment philosophy is like the application of nuclear energy: Hitler used it to build atomic bombs, while Einstein used it to build nuclear power plants. Different investment concepts can be developed based on the same market theory, and they have individual trends. The right investment concept is the basis for developing a good trading system.

Trading system; accounting for 15%

The development of a trading system is a systematic project, involving design, manufacture, inspection, evaluation, selection, actual combat, management, maintenance and upgrading, and the pursuit of the best overall effect. At this stage, it is not only necessary to familiarize yourself with the results of the predecessors, but also to establish your own trading system. After repeated research, design, testing and practical application, there are not many people who can create their own systems in practice.

Only by deeply understanding the essence of the market and mastering the correct market theory and investment philosophy can an excellent trading system be successfully developed. Otherwise, it is like a blind man touching an elephant. If a trader with a battle-proven investment philosophy can be upgraded to a trading system, he can be even more powerful and make more stable profits. Trading systems must be tested by historical data and proven in actual combat before they can be used to manage large funds.

This stage requires intelligence, talent, knowledge structure, and a spirit of hard work.

VI. Capital management; 15% share

Money management rules are an integral part of a trading system and can be reduced to purely mathematical problems.

This stage requires intelligence, talent, and a reasonable knowledge structure.

VII. Risk control; the proportion accounts for 15%

Risk control involves the theory and practice of limiting losses and protecting profits. The relevant rules are also an integral part of the trading system and can also be reduced to mathematical problems.

This stage requires intelligence, talent, and knowledge structure.

Psychological control; accounting for 30%

The core of this stage is the real execution of the trading system, that is, following the instructions of the system perfectly to obtain profits from the market.

Many traders are unable to cross the psychological barrier after the first seven levels. Why is this so?

It has been widely recognized that the real secret of trading success lies with the trader himself. Following the trend is easier said than done. In the practice of trading in foreign exchange, stocks, etc., especially those involvedBCR ForexTraders on other platforms need to recognize the importance of psychological control.

Traders in history have often had excellent systems that have been proven in the field, but have failed miserably by not following the rules and using emotional trading.

Using a trading system to make decisions is a mechanical, monotonous, and boring job that requires a lot of patience and will. Holding large positions for a long time and experiencing severe market fluctuations will lead to various mood swings. Traders need to use strong will to suppress the impulse of position squaring profits.

Proper handling of mood swings is a hurdle that system traders must overcome. The only way is through repeated practice, trial and error, and groping. Successful system traders are expected to become market experts, which is what elite traders can be entrusted with.

This stage requires high emotional intelligence and excellent psychological control.

Nine, both political integrity and ability; the proportion accounts for 2%

The trader's character is crucial, which is also an important condition for identifying experts. I have always believed that making a deal is like being a person, and the product is like character. If the character is not good, it will be difficult to improve the level of making a deal. Systematic traders can only be granted heavy responsibilities if they have both political integrity and ability, and eventually become market predators. There are also some traders who successfully passed the first eight levels and retired early after making huge profits, hiding in the countryside or the city.

This stage requires traders to have both ability and political integrity.

The above nine factors, I hope beginners will carefully understand and repeatedly speculate in practice. The following is a brief discussion of how to build yourself according to these processes.

Beginners need the truth the most, but they often go to great lengths to find fancy theories and indicators. They are keen on new ideas, but they do not have the ability to distinguish. They often regard gold as stone and stone as gold.

In fact, there are not many new things under the sun, and new things in the securities futures market are even rarer. The truth is often simple and limited in number. It has been repeatedly recommended by many market participants, but ignored by beginners. If someone recommends it without understanding the current affairs, it is often regarded as a cliché, and even ridiculed. Beginners often fail to grasp these truths after hitting a wall and failing.

In the process of growing from a beginner to a systematic trader, each step forward requires time and money to overcome certain psychological hurdles.

In the above nine processes, the focus is on the third and fourth levels, and the difficulties are the third, fifth and eighth levels. It is recommended that beginners focus on the third, fifth and eighth levels.