Forex multi-account manager Z-X-N
Accepts global forex account operation, investment, and trading
Assists family office investment and autonomous management
The positive role of insensitivity in foreign exchange investment and trading.
From the perspective of psychology, the formation mechanism of insensitivity involves the dynamic interaction of complex individual development processes and environmental factors. As an individual trait, insensitivity is not generated randomly, but gradually internalized and stabilized under the joint action of multiple factors such as socioeconomic, cultural and family environment that individuals have experienced for a long time. For example, children from economically underdeveloped families may form a relatively slow response pattern to external stimuli at the neurocognitive level due to long-term exposure to resource scarcity and high-pressure environments. This response pattern can be regarded as an adaptive strategy in evolutionary psychology, which aims to reduce the emotional loss and cognitive load of individuals when they cannot effectively cope with stressors, and has certain ecological rationality and environmental adaptability.
In the highly complex and uncertain field of foreign exchange investment and trading, insensitivity plays a unique and critical positive role. The price fluctuations in the foreign exchange market show typical nonlinear characteristics. Affected by the instantaneous impact of multiple factors such as the release of macroeconomic data, geopolitical events, and the adjustment of the central bank's monetary policy, the price trend changes rapidly and the trading pressure is huge. In this context, traders with insensitivity can effectively inhibit the over-activation of the emotional brain area and maintain the rational decision-making function of the prefrontal cortex by virtue of their relative immunity to market noise, so as to adhere to the trading strategy based on in-depth fundamental analysis and technical indicator research. This consistency of trading behavior based on stable psychological characteristics can achieve a steady accumulation of returns through the compound interest effect in the long-term investment process and achieve investment goals. However, it must be emphasized that the successful realization of this investment depends on a solid financial foundation. Adequate capital reserves can not only ensure that investors maintain their margin level and avoid the risk of forced liquidation when the market is extremely volatile, but also provide them with sufficient trial and error costs and time dimensions to delve into professional knowledge such as quantitative trading models, risk management strategies, and market microstructures, and improve trading skills.
In China, foreign exchange investment transactions face strict policy and regulatory constraints and specific market environment restrictions. From a policy perspective, foreign exchange control policies are aimed at maintaining national financial security and international balance of payments, and strictly regulate the subjects, quotas, channels, etc. of foreign exchange transactions. In terms of the market environment, China has not yet built a mature and complete foreign exchange investment infrastructure and service system. Investors face multiple challenges such as narrow investment channels, insufficient service supply of professional investment research institutions, and the society's cautious attitude towards high-risk investments. These factors have jointly raised the entry threshold for foreign exchange investment transactions and increased the difficulty and complexity of investment.
Despite facing many difficulties, some domestic foreign exchange investors have successfully transformed disadvantages into advantages by deeply exploring market opportunities. They use econometric models to conduct in-depth analysis of market data, grasp the laws of market operation, build trading strategies based on quantitative indicators, and adhere to the concept of value investment, focusing on long-term returns rather than short-term speculation. This steady and low-key investment style has enabled them to obtain considerable returns in the foreign exchange market and realize the appreciation of family wealth. These successful investors have a deep understanding that in the field of foreign exchange investment, the limited market capacity and trading opportunities determine that excessive competition and herd effects will quickly weaken the effectiveness of investment strategies. Therefore, maintaining independent thinking and avoiding blindly following trends and overexposure are key principles for maintaining the sustainability of investment returns.
In summary, in foreign exchange investment transactions, if investors want to achieve long-term stable profits, they need to have multi-dimensional capabilities and conditions. Sufficient capital reserves as a material basis ensure the risk resistance and sustainability of investment; sufficient time is invested in academic research and market practice to improve professional quality; strong emotional resilience and patience to cope with market uncertainty and volatility; and appropriate insensitivity as a key psychological trait helps investors remain calm and rational in a complex and changing market environment and make investment decisions based on data analysis and logical reasoning.
In the field of foreign exchange investment, short-term and ultra-short-term trading strategies with small capital volumes are often highly dependent on trading systems to achieve accurate trading execution.
This is because such transactions have a short time span and high trading frequency, and require extremely accurate grasp of trading opportunities. The trading system, with its automated execution mechanism based on algorithms and preset rules, can effectively capture fleeting market opportunities and achieve accurate operations.
In contrast, in the long-term investment of large funds, the trading system is not an indispensable core element, and it is even difficult to play a significant role in many cases. The long-term investment of large funds focuses more on fundamental factors such as macroeconomic situation analysis, industry development trend judgment and enterprise fundamental research. Its trading decisions are more based on the judgment of long-term economic cycles and market trends, rather than relying on short-term market fluctuation signals, which makes it difficult to fully reflect the advantages of the trading system.
From the characteristics of the trading system itself, no trading manager can build a perfect trading system that can be used once and for all. The foreign exchange market environment is in a complex and continuous dynamic change, which is affected by multiple factors such as the release of global economic data, geopolitical situation, and monetary policy adjustments. Based on this, the trading system must have dynamic adaptability, and through continuous evolution, learning, parameter optimization and strategy updates, it can adapt to the ever-changing market environment. In fact, in the face of the complexity and uncertainty of the foreign exchange market, there is no trading system that can always maintain effectiveness and continue to make stable profits.
If participants in the foreign exchange investment field expect to obtain rich investment returns in the market, they must make continuous efforts and experience market setbacks. In terms of the accuracy of the trading system, most traders expect the trading system to achieve a high accuracy of 80%, but the actual situation is that when the accuracy of the trading system reaches 50%, combined with a scientific and reasonable fund management strategy, it is enough to achieve considerable returns. Fund management strategy plays a key role in foreign exchange trading. It effectively balances the relationship between risk and return by reasonably allocating funds, controlling position risks, and setting stop loss and stop profit points, making up for the lack of accuracy of the trading system.
In addition, the effective life of the foreign exchange investment trading system is usually short. Even if a trader accidentally encounters a system that performs well in a specific period and strictly follows the established trading discipline, the risk of failure cannot be completely avoided. This is mainly due to the rapid change of the foreign exchange market, which may change the applicable conditions of the trading system in the short term. The above situation is mainly for short-term small capital traders, while for large capital long-term foreign exchange investment traders, the trading system is not a necessary component of their investment decision-making. They pay more attention to the exploration of long-term investment value and the grasp of macro market trends.
In the field of foreign exchange investment and trading, if independent investment and trading entities can always maintain firm beliefs, it is of great significance for them to achieve stable and sustainable development in a complex and changing market environment.
From the perspective of market microstructure theory, institutional investors need to consider many factors in the asset allocation process due to their large capital scale and high degree of portfolio diversification, which makes their decision-making process involve multi-level approval and complex risk assessment, which leads to relatively slow action. This characteristic is similar to the survival mode of dinosaurs in biology. Although they have strong resource reserves and risk resistance, they are difficult to respond quickly in the face of a rapidly changing market environment and have a certain market inertia.
On the other hand, according to behavioral finance theory, retail investors have relatively small capital scale and more personalized and flexible decision-making process. Based on their own rapid interpretation of market information, they can use technical analysis tools or keen perception of market sentiment, and rely on flexible capital scale and decision-making mechanism to quickly adjust trading strategies and capture short-term investment opportunities in the market.
From the perspective of empirical research on long-term investment performance, through tracking and analyzing the investment behavior of a large number of fund managers, it is found that after deducting management fees and transaction costs, the long-term investment operation performance of most fund managers has failed to exceed the market average. In the macro context of the global financial market, according to modern portfolio theory, financial giants are limited by market liquidity and investment target capacity when allocating assets due to their huge asset size. If they can achieve an annual return of 30%, they have achieved excellent performance. However, due to the uncertainty of the global economic cycle, geopolitical risks and volatility of financial markets, achieving this goal faces many challenges in most periods.
According to the statistical data of many financial institutions based on risk-return theory, the annualized return of 8% to 10% is in a relatively balanced range between risk and return, which is very attractive to conservative investors with low risk appetite. As long as financial retail investors devote enough energy to market research based on the efficient market hypothesis, deeply learn and apply trading techniques such as technical analysis and fundamental analysis, and reasonably construct investment portfolios, they may be able to achieve these return goals. Under certain specific market conditions, with its flexible trading strategies and ability to respond quickly to market changes, it can even surpass international financial giants, institutional investors and fund managers in performance.
In foreign exchange investment and trading activities, according to risk management theory, the prerequisite for maintaining confidence is that the investment and trading subject must have sufficient operating funds to meet the maintenance margin requirements, cope with the capital needs brought by market fluctuations, and ensure the smooth development of trading activities; at the same time, the theory of investor emotion management in behavioral finance should be used to maintain a good psychological state at all times to avoid the negative impact of emotional fluctuations such as overconfidence, fear, greed, etc. on trading decisions; in addition, it is necessary to always be vigilant about the weaknesses of one's own human nature and use risk control techniques, such as stop loss, stop profit and other strategies, to reduce the interference of emotions on trading behavior. In the process of financial trading operations, the investment and trading subject, based on the agency theory, has the dual roles of operator and risk controller. Only by establishing a sound self-assessment and supervision mechanism and using investment performance evaluation indicators to honestly examine their own behavior and decisions, can the investment and trading subject follow the laws of the financial market in the complex and changing financial market and achieve steady development.
In the field of foreign exchange investment and trading, it is generally more stable to wait until the central bank governor finishes his speech before entering the market.
When the mainstream market sentiment tends to be bearish and the direction of the central bank governor's speech is not very clear, the market is likely to show a gradual decline after the speech. On the contrary, if the mainstream market sentiment is bullish and the direction of the central bank governor's speech is vague, the market is likely to gradually rise after the speech. In foreign exchange investment and trading, patient waiting is an extremely critical factor. Only by patiently waiting can you accurately grasp the opportunity and obtain investment returns.
Traders often worry that during the central bank governor's speech, there will be remarks that are contrary to the market trend, which will lead to premature entry and fall into a passive situation. Therefore, it is safer to wait until the central bank governor's speech is over before entering the market. This is because if the mainstream market sentiment is bearish, and the speech content has neither obvious bearish nor bullish tendencies, the market lacks upward momentum and can only adjust downward; similarly, if the mainstream market sentiment is bullish, and the speech content does not show obvious bearish or bullish trends, the market will not go down, but will only develop upward. Waiting for the speech to end, leaving more safety space for yourself, this strategy is not only applicable to daily life communication scenarios, but also to investment entry decisions.
In the complex system and dynamic environment of foreign exchange investment transactions, from the perspective of risk-return trade-offs, market adaptability, and strategy timeliness, it is not recommended to adopt the position-building, position-increasing, position-reducing, and position-retention strategies created by Dennis based on the 4-week breakthrough principle, which is commonly known as the Turtle Trading Method.
The Turtle Trading Method originated in an earlier period. After the changes in market structure, trading technology innovation and the profound evolution of the macroeconomic environment, this strategy has exposed a high risk exposure and adaptability shortcomings in the current highly complex and uncertain market.
The Turtle Trading Method mainly covers the following two trading schemes:
Scheme 1: When the asset price effectively breaks through the 20-day (4-week) cycle high, according to the trading logic, long positions should be opened immediately and short positions should be closed at the same time; conversely, when the price falls below the 20-day (4-week) cycle low, short positions should be opened and long positions should be closed at the same time.
Scheme 2: When the price successfully breaks through the 55-day (11-week) cycle high, investors need to establish long positions and close short positions in a timely manner; and when the price hits the 55-day (11-week) cycle low, the reverse operation should be performed, establishing short positions and closing long positions. In the trading process after the breakthrough, according to the established rules, a gradual increase in positions strategy is adopted. Once the loss reaches the preset stop loss threshold, the stop loss mechanism is immediately triggered to control the further expansion of risks; if it is in a profitable state and meets the conditions for increasing positions, the position will continue to be increased to expand the scale of profits.
From the perspective of strategy applicability, this operation method may have shown certain effectiveness in a specific historical stage of the development of the futures market. However, in the current context of highly developed Internet technology, exponential growth in information dissemination, and significant changes in the behavior patterns of market participants, its effectiveness faces severe challenges even in the futures market. The immediacy and massiveness of information enable investors to quickly adjust trading decisions, and the investment behavior of long-term positions is decreasing, making it difficult for the futures market to form a sustained and stable long-term trend, which greatly weakens the effectiveness of the Turtle Trading Method that relies on long-term trends for profit.
In foreign exchange investment practice, although the pyramid strategy of profit ladder increase in the Turtle Trading Method has theoretical reference value to a certain extent, it needs to be extremely cautious in actual application. Especially when the exchange rate is at an extremely high or low level, large-scale increase in positions must be resolutely eliminated. This is because the price fluctuations of major currency pairs in the foreign exchange market show unique cyclical and mean reversion characteristics. After a sharp rise, they tend to quickly revert to the mean and experience a correction. From the historical data statistics and price fluctuation law analysis, the price top of major currency pairs is roughly maintained at around 2 US dollars, and the bottom is around 1 US dollar. The price fluctuation range is relatively limited and has obvious boundary constraints. In contrast, the futures market is more open due to its trading standards Due to the difference in mechanisms, there is no such natural limit on price in theory. Under extreme market conditions, the fluctuation range may be infinitely magnified. Based on the above analysis, foreign exchange traders must remain rational and prudent, avoid blindly applying fixed strategies, and fall into the misunderstanding of strategy selection.
From a philosophical perspective, Heraclitus's saying "You cannot step into the same river twice" deeply reveals the eternal variability of things. In the field of financial markets, this philosophical thought is also applicable. The market environment is a complex system that evolves dynamically and is affected by multiple factors such as macroeconomic policies, geopolitical situations, technological innovations, and investor sentiment. Past trading strategies, especially the Turtle Trading Method, which has a history of 30-40 years, are difficult to directly apply to the current market because the market basic conditions and operating logic have undergone fundamental changes. The fact that Dennis himself failed when using this strategy decades ago and eventually retired also indirectly confirms the importance of the timeliness and market adaptability of the strategy. Although foreign exchange investment transactions are highly private, it is difficult to determine whether there are still investors using this strategy in actual transactions. However, from public market data, academic research and investor discussions, some foreign exchange investors in the Chinese investment and trading market still mention this strategy from time to time. This phenomenon is particularly inappropriate in the current market environment and deserves in-depth reflection and discussion.
13711580480@139.com
+86 137 1158 0480
+86 137 1158 0480
+86 137 1158 0480
Mr. Zhang
China · Guangzhou
13711580480@139.com
+86 137 1158 0480
+86 137 1158 0480
+86 137 1158 0480
Mr. Zhang
China · Guangzhou