Trading System: Myth and Reality

In the field of investment, trading systems are often seen as the key to success. However, there are many misconceptions about trading systems. Some believe that having a trading system is enough to make a profit, while others think that one must constantly pursue better systems. There are even those who firmly believe that there is a magical system that guarantees profits without losses.

Are these views reliable? In fact, there is no trading system in the world that guarantees stable profits forever. Even with an excellent system, it does not mean that profit is guaranteed. A good system requires the user to have strong execution skills, and everyone needs to find a system that suits them.

The role of the trading system is similar to military guiding principles. It cannot guarantee victory in every battle, but it can avoid disastrous defeats and preserve opportunities. The system operates at a strategic level, while specific operations belong to the tactical level.

When evaluating a trading system, the key indicator is the "profit and loss ratio." This refers to the average profit amount divided by the average loss amount. An ideal profit and loss ratio should be no less than 2, 3 can be considered passable, 4 is good, 5 is excellent, and above 5 is very rare.

Before establishing an operating system, it is necessary to clarify the investment objectives and risk tolerance. A complete system should include elements such as cycle judgment, operational thinking, coin selection, timing, buying and selling rules, fund management, and risk control.

Cycle judgment is the primary task of investment, and following the trend can significantly improve the success rate. The operational mindset determines strategies under different market conditions. Selecting coins is especially important in a bull market, and factors such as circulation size, themes, and on-chain data need to be considered.

Timing and trading rules are key to controlling risks. Buying should be based on technical entry points, while selling requires some foresight. Capital management involves profit protection, position opening strategies, and leverage usage. Risk control is an iron rule in trading, helping to avoid emotional actions.

The trading system provides clear entry and exit signals, making trading more standardized. A system is not necessarily better just because it is simpler or more complex; the key is efficiency. Taking the Granville's Eight Methods as an example, it uses moving averages to determine buying and selling opportunities, making it a basic yet practical trading system.

In summary, the trading system is an important tool, but it is not万能. Investors need to establish and continuously improve a trading system that suits their own situation.