The core principle of trading can be summarized in one sentence: Cut losses short and let profits run. Behind this are several widely accepted foundational theories, which also distinguish professional traders from ordinary retail investors.

1. The Three Assumptions of Technical Analysis
This is the foundation of chart trading: market behavior reflects everything (price has already incorporated all information), prices move in trends (the trend is your friend), and history repeats itself (based on unchanging human nature). It provides you with an actionable framework, but not a scientific law.
2. The Kelly Formula and Money Management
The core is to solve the question of "how much to bet." The formula f = (bp - q)/b guides you to optimize position size based on win rate and risk-reward ratio. It tells you: even if your win rate is below 50%, as long as the risk-reward ratio is large enough, the system can be profitable. At the same time, avoid heavy single trades that could lead to bankruptcy.
3. Dow Theory (The Origin of Trends)
Defines the phase structure of bull and bear markets and emphasizes that closing prices are most important. It helps you understand that the power of the main trend far exceeds intraday fluctuations, and trading should follow the primary direction.
4. Contrarian Theory (Counter-Think)
When market sentiment is extremely unanimous (e.g., 90% bullish), the trend often reverses. The core idea is to bottom out in despair, rise amid hesitation, and top out in frenzy. This helps you avoid becoming a bagholder at the high.
5. Trading Psychology
Recognizes that humans are inherently unsuited for trading (loss aversion, disposition effect, etc.), and discipline is needed to counteract instincts. When profitable, traders feel anxious (want to take profits), and when losing, they fantasize about rebounds. Mature traders, however, do the opposite: cut losses short and let profits run.

Summary of core principles:

· Positive Expectancy: Your trading system must earn more than it loses in the long run.
· Risk First: Ask "How much can I lose at most" before "How much can I make" on each trade.
· Consistency: Follow the system strictly, not predictions based on feelings.
· Simplicity and Effectiveness: Complex models often outperform simple trend-following and position management.

Finally, remember: you cannot "beat" the market, only manage your reaction to it. All theories ultimately point to risk control and disciplined execution. $ETH ‌$BTC ‌#加密市场小幅下跌