The traditional financial investment god "ETF saves the world" has experienced many rounds of bulls and bears, and his investment style is stable. Through index fund transactions, he has created a myth of more than ten times in ten years. The grid trading strategy is one of the favorite trading strategies of E University, and it has been operated in real trading for more than 8 years.

first level title

0.0 Grid Strategy Basics

secondary title

0.1 Investment System

Everyone who invests should have a complete investment system. The whole system roughly includes the following two aspects:

The first aspect is to observe the system of the financial world. That is to understand the operating principle of the financial market, understand the internal and external connections of the financial market and the factors that affect the trend of the financial market. This requires data and tools to help us identify important things such as funds, sentiment, and valuation, so that we can know what stage each market is in and the environmental risks we are in.

The second aspect is the complete operating system. The operating system should include various investment strategies to tell you when to buy and when to sell.

secondary title

0.2 Trading strategy

Next we talk about trading strategies. Different philosophies for recognizing the financial world lead to completely different strategies.

There are many investment strategies in this world. Let me give you a few examples of the simplest quantitative investment, such as 5:5 stock-debt balance. Buy 25% of your assets in Shanghai and Shenzhen 300, 25% in CSI 500, and 50% interest rate bonds, and then rebalance regularly or at a fixed rate (operate once every three months or six months to restore the initial ratio of each product; or a certain product After a 50% rise, the fixed range operation mechanism will be triggered to restore the initial ratio of each product).

Another example is "scheduled investment". Buying a certain product regularly every month, accumulating a small amount into a large amount, smoothing costs, and finally making money in the bull market. These are the simplest investment strategies. But in the long run, at least half of professional investors can't outperform these simplest strategies.

Strategies can continue to be optimized for higher yields and smaller drawdowns. For example, to upgrade the regular investment strategy, you can set a selling trigger point, such as 100% overall profit, or 20% annualized profit and then sell. This solves the problem of selling after buying. Further, you can also upgrade the purchase: whenever the rate of return of the fixed investment strategy drops below -20%, start to double the fixed investment to reduce the cost faster. Find shortcomings in practice and continuously optimize strategies. (Note: The above strategy is just an example, it does not mean that I think such a strategy is worth implementing)

In a mature system, I suggest having a long-term strategy as well as a short-term strategy. The long-term strategy is to make big money on growth + inflation. The short-term swing strategy makes money from emotions and fluctuations. If there is a situation where the volatility is extremely large and there is no increase or decrease at the end of the year, it is suitable to use the band strategy at this time. But if you are obsessed with the small money of the band strategy in a bull market, it is very likely that you will miss the real wealth. Therefore, the combination of long and short strategies is the best investment system in my ideal.

The grid strategy is a short-term and short-term band strategy, which obtains fluctuating profits. Looking back at various financial products, you will find that some products have extremely large fluctuations, but in the long run there is almost no increase. If a variety with huge short-term fluctuations has a low correlation with the variety you hold for a long time, it is simply the best.

In addition, short-term swing strategies can also be superimposed on long-term positions. In this way, part of the gains can be realized in time, and your mentality will be more peaceful when you hold positions for a long time.

first level title

1.0 The overall idea of ​​the grid strategy

The financial market we deal with, at least in the short to medium term, will have three trends: rising, turbulent, and falling. What we have to do is to keep ourselves calm when any kind of possibility happens, no matter from factual or psychological level. The grid strategy is a high-quality strategy that can help you obtain a certain amount of income in a volatile market and greatly relieve anxiety.

To start a grid, what you need to do is very simple:

The first step: determine the trading variety.

Step 2: List grid tables. The table includes transaction price, transaction amount, and transaction date.

Step 3: Do a stress test.

Step 4: Set up transaction reminders.

secondary title

1.1 Trading varieties

Before starting the grid strategy, it is necessary to determine the trading symbols that are applicable to the strategy. Suggested scope of application Bottom line: The type of grid you want to make must be a type with a bottom. The breed that doesn't die. If the fundamentals change, the rise will not come back in this life, and in the grid strategy, it is considered dead. In addition, it is difficult to make a lot of money by making grids for varieties that will rise all the way in the long run, and the efficiency will be lower.

secondary title

1.2 Transaction Grid

First, design the transaction price. When designing the form, list the transaction price, transaction amount, and transaction date. Among them, if the price part starts from 1, with a range of 5% as one net, the buying prices are: 1, 0.95, 0.9, 0.85, 0.8... The selling price is 1.0 except for the first net. Buy at 1.05 When going out, every other website is the purchase price of the previous website. That is, if you buy at 0.95, you can sell at 1 yuan; if you buy at 0.9, you can sell at 0.95, and so on.

The so-called grid means that we have to weave a big impenetrable net and eat up every profit that enters this big net.

Second, about the timing of the start. The best time to start is when the price is slightly below the value. The price is too high, and it is difficult to make money on the part bought. The price is too low, and I will fly away after I can't earn a few times. There is no uniform standard for this, but we can observe the ETF plan. If we start buying, it at least shows that this thing is not too expensive.

Third, about grid size. In the 1.0 system, I usually give 5% for ordinary varieties. For varieties with large fluctuations, such as brokerage index, I will give 10%. for reference.

Fourth, do not open stocks with similar trends. Taking up too much money is not a good thing, nor is it meaningful.

secondary title

1.3 Stress test

The key point of the grid strategy is not how much money you can make, but that you can know what will happen to your account after the worst happens. With such preparation, you will benefit a lot from the strategy design itself or your mentality, so stress testing is the most important.

secondary title

1.4 Pending order transaction reminder

There are two types of pending orders, one that can be pending indefinitely and one that does not support indefinite pending orders.

Varieties that can be placed indefinitely, such as bank paper silver or paper gold, are extremely friendly to grid transactions. You can hang 2 or 3 nets on the upper and lower sides according to the reservation price, and then go to eat, drink and have fun. When the price trend hits the price you set, the system will prompt you to make a deal, and then you can add another file to buy and sell, and continue to eat, drink and have fun.

Some varieties do not support long-term pending orders, such as most ETFs. That's when you need trade alert software. Many trading software can be implemented, including PCs and mobile phones. When the price hits your set price, an alert pops up, you open the software to trade and place an order, then close the software, and go to eat, drink and have fun again.

Of course, it would be perfect if you can write the pending order trading software to run automatically, or hire a trader. That way you can eat, drink and have fun all the time.

There is no perfect trading strategy in the world. You need to combine your strategies. Combine short- and medium-term strategies with long-term strategies to deal with what may happen in the future. According to the observation results brought by the observation system, different weights are dynamically assigned to each trading strategy. In layman's terms, sometimes more funds are allocated for short- and medium-term strategies, and sometimes more funds are allocated for long-term strategies.

first level title

2.0 Optimization of Grid Strategy

secondary title

2.1 Retaining profits

In each grid sell operation, you can keep the profit. Since this part costs 0, you can hold it indefinitely.

Financial psychology tells us that it is easy for people to divide positions into different psychological accounts. Then, we might as well take this part of the zero-cost profit as a variety of "free access" psychological accounts and hold it for a long time.

The specific method of retaining profit sub-strategy:

For example, buy 10,000 copies of a certain product for 10,000 yuan at a price of 1 yuan. On 1.05, 9,524 copies of 10,000 yuan were sold, and the remaining 476 copies will never be sold, or they will be sold again when they are extremely overvalued.

You can continue to evolve this sub-strategy. For example: keep double profits, keep three profits. How to understand? You have earned 5% per frame, but because the price has fallen too much at this time, you can not only keep 5% of the profit, but also 5% or even 10% of the principal.

secondary title

2.2 Gradually increase the size

As long as a variety will not die, the lower the price, the greater the value. At the same time, the possibility of bottoming out and volatility is gradually increasing. Therefore, each grid increases a certain amount of investment, and ultimately can obtain greater profits. This also alleviates the defect of too low bottom profit in the 1.0 system to a certain extent.

Stress testing is very important in the process of overweighting. When making a list, list whether you can persist in the worst case. Then gradually increase the size, you can try to start from the second grid, and each grid is 5% more than the previous grid. At the end of the calculation, you find that your funds and mental state can't bear it anymore, then start to increase the amount from the third box, and use the same amount for the first two boxes. If you still can't bear it, start from the fourth frame.

secondary title

2.3 All in one go

You can imagine that you are a fisherman who goes out to sea to fish. At this time, you need to face a choice: if you bring a very dense net, then you will catch all the small fish. But the problem with this is that you take all the small fry and they will never grow into big fish for you to eat. However, if the mesh you bring is large, you can indeed catch big fish, but the chance of encountering big fish is very low, and you may not catch one in a year.

So we can cast more nets, large nets, medium nets, and small nets together, which is our 2.3 strategy.

If you treat 5% of the grid as a small grid, then you can set up a 15% medium grid and a 30% large grid. Distribute your resources among three grid systems. Use 5% of the grid to meet daily needs, 15% of the grid to improve life, and 30% of the grid to make a lot of money.

specific methods:

The operation methods of medium and large nets are the same as those of small nets, but the grid width is increased to 15% and 30%. Of course, these two figures can be adjusted by yourself.

China Open 0.85, 0.7, 0.55... buy, sell at 1, 0.85, 0.7 respectively.

Those bought by Dawang at 0.7 and 0.4 were sold at 1 and 0.7 respectively.

Still take out the form and do the stress test.

Although the profit of small nets is not as large as that of big nets, it is necessary to exist. Because if the entire variety only fluctuates within the range of 10%-20% for a long time, the big nets will not be able to make money, while the small nets can make a lot of money.

Summarize

Summarize

Grid strategy is part of my overall investment system. As mentioned, it is flawed, but indispensable.

It can provide a steady stream of profits in a volatile market; it can satisfy everyone's desire to trade with nowhere to put it; it can avoid the anxiety of taking the elevator up and down without realizing profits.

It's not perfect. There are no perfect people, no perfect things, and no perfect trading strategies in the world. What we have to do is to think about how to organically combine imperfect strategies and imperfect varieties, and try our best to make our trading system more vital, more resistant to blows, more able to thrive, and earn more money.

The reason why you can't predict the future but can live well in the capital market is that all holding or selling plans have been made long before buying. Regardless of the rise/fluctuation/fall after buying, there are plans.

If you're going to try this strategy, please read this three-part series at least five more times to incorporate the things I've highlighted into your trading plan. In this way, it is possible to minimize your trial and error costs.

Good luck with your investment.