Understanding the path to financial freedom

I. One of the best works in the securities trading field

Trade your way to financial freedom by fan K. dr. SAAP (Van K. tharp), the second Chinese version of the original book in 2006 was published by the Mechanical Industry Publishing House in 2008. The Chinese translation of the original book version 1999 was named "the path to freedom in the financial kingdom".

Dr. Fan K. Sapu is internationally recognized as the No. 1 master in transaction psychology. The road to financial freedom is considered to be one of the three best books in the securities trading field. The road to financial freedom is useful for traders and investors.

The road to financial freedom points out that, whether a trader or an investor, the most important thing is to find a method suitable for their own personality and goals and correct their mentality so that they can reach the realm of financial freedom. The two goals of this book are to help you find the secret of the Holy Grail and help you find a successful trading system that suits you.

 

2. The secret of the holy cup

Traders or investors are looking for the Holy Grail. The Holy Land System is a mysterious transaction system that perfectly follows the market and is always right. It can bring huge benefits but no loss. In fact, such a system does not exist.

Successful investments require more internal control than others, which is the first step towards success. The key element of successful transactions is self-control. The true meaning of the holy cup is that it tells you the secrets of yourself.

Transactions consist of three elements: psychological status, Capital Management, and system development. Fan K. dr. Sa believes that the psychological status is the most important (about 60%), followed by capital management/position determination (about 30% ), system development is the least important (only about 10% ).

 

3. All major routes allow Rome

To develop a suitable trading system, you must choose an effective concept.

After observing various transaction practices, the book finds that the major roads are Rome: long-term trend tracking, fundamental analysis, value investment, band trading, price difference trading, arbitrage, and cycle.

Fan K. dr. SAAP believes that none of these ideas are more effective (or more valuable) than the other, and will not express any personal preferences to any one. As long as you have a system with a positive expected return, you can trade with any idea.

One of my deepest impressions on trend tracking is that most markets have no trend most of the time and may only have a trend between 15% and 25%. This reminds me of a trading strategy of Livermore, the hero of stock book memoirs. He always stays out of the market when the market is hesitant or indecisive.

The book repeatedly mentions two systems that involve fundamental analysis: The canslim System of o'nell and Buffett's company model.

 

4. The transaction system should be suitable for the big Environment

Dr. Fan K. saapp believes that the evaluation of the big environment is crucial for system development. Several unrelated systems suitable for the big environment may constitute a very good transaction plan. If the big environment changes, we should develop several more systems for use. Compared with the first version, the second version of the book adds a full chapter (chapter 1) to explain the Transaction Strategies that adapt to the big environment.

Dr. Fan K. SAAP believes that all transaction systems should reflect the big environment. Everyone should at least track the big environment and develop two or three systems based on the seemingly emerging model and trade them accordingly.

I personally built my own long-term trading system and interim trading system for the long term and mid-term stock price fluctuations. At present, my annual transaction is dominated by the Medium-Term transaction system. I hope that after a few years, when the overall valuation of the stock price falls into an underestimation, the transaction will become dominated by the Long-term Transaction System.

 

V. Expected Benefits of the transaction system are far more important than Reliability

The expected benefit refers to the profit produced by the transaction system at every risk of one dollar.

Expectations and reliability (the probability of success) are not the same thing. People tend to make profits for every transaction or investment, so they are often attracted by systems with a high probability of success. In fact, there is no expected value for reliability, because the reliability may be high but the expected value is negative.

To get a positive expected benefit, you must find a way to "stop losses and roll profits" by exiting the market ". Exit is the main part of developing a high-positive expected income system, and, most importantly, you must fully understand the size of your position to achieve your goals.

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