This year marks the 17th Futures Live Trading Competition, which concluded at the end of September, and I have been following it closely all along. The champions of these futures contests always manage to generate incredible profits, which are truly enviable. However, as traders, we cannot merely observe the competition with a spectator's mentality; we must analyze and learn from their strategies to improve ourselves. After all, reflecting on others can illuminate our own gains and losses.

Today, I am dedicating an article to review and analyze the trading operations of two champions: the lightweight division champion "Chasing the Wind" and the heavyweight division champion "WDD." I will examine their trading processes, outcomes, net value growth curves, risk levels, net profit changes, and the variety of trades they engaged in, to provide a reference for everyone.

1. Overview of This Year's Futures Live Trading Competition

The Futures Live Trading Competition was first established by Futures Daily in 2006 as a national event, and in 2014, it incorporated a global derivatives segment. The competition is divided into different categories, such as the lightweight division, heavyweight division, fund division, and quantitative division, among others.

It typically begins in March and ends in September each year, lasting for half a year. Participants only need to have a futures account with a designated futures company to register.

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Results of This Year's Competition:

According to the official website of the Futures Live Trading Competition, there were a total of 108,450 participants this year, with a total参赛资金 of 34.6 billion yuan. Overall, there was a loss of 1.7 billion yuan, with a total of 2 billion yuan in accumulated transaction fees.

Among all participants, 30,450 made a cumulative profit, while 66,344 incurred a cumulative loss. This largely aligns with the 80/20 rule of financial markets, and the outcomes of the futures competitions over the years have generally been similar.

I would like to highlight two points for everyone's attention:1: Do not be deceived by the appearance that there are quite a few profitable people and the proportion seems quite high. We must understand that most participants in futures actual trading contests are experienced, and the overall level of traders is relatively high, so the profit and loss data follows the 80/20 rule.

If we were to statistically include all futures traders, the overall profit ratio would definitely be lower than this, so everyone must first have a sense of risk before entering actual trading, and not be overly optimistic.

2: We can see how short-term frequent trading can generate such high fees, with the fees generated being higher than the overall loss amount.

2: The trading of the lightweight group champion "Chase the Wind"

1: Trading process.

In the first week of the competition, Chase the Wind did not make any operations. Starting on April 6th, they began to go long on urea futures, making a small profit at the beginning, and then made short-term operations on several varieties. On May 19th, the account doubled in value.

The significant profitable trade occurred at the end of June with rapeseed meal futures going long. Due to the production reduction data from the U.S. Department of Agriculture, rapeseed meal futures rose sharply, and Chase the Wind closed the position near the daily limit price, making a profit of 60,000.

On July 10th, they went long on coking coal futures, making a profit of 70,000.

On July 25th, they went long on soda ash futures, making a substantial profit of 500,000.

On September 7th, they went short on lithium carbonate at a price of 187,100 yuan, and subsequently, lithium carbonate futures fell rapidly, with a drop of 20%, resulting in a profit of 400,000.2: Outcomes of the Trade.

"Chasing the Wind" participated in the competition on March 31st, starting with a principal of 50,000, and accumulated a net profit of 1.09 million. Throughout the competition, there were 77 days of profit and 37 days of loss, with a trading win rate of 67%, a maximum of 10 consecutive days of profit, and only 1 day of consecutive loss.

The largest single-day loss was 103,760, the highest daily return rate reached 45%, the average daily return rate was 2.9%, and the maximum drawdown was 50.75%.

3: Trade Data Analysis.

A: Net Value Growth Curve.

The graph above shows the curve of the account net value growth for "Chasing the Wind" throughout the competition.

There are several points that we need to pay attention to:

(1) The net value has never fallen below the initial capital. From the start of trading, profits have been gradually accumulated, forming a profit cushion.

Large profits were made on the basis of the profit cushion, and there were two relatively serious profit give-backs later, but the principal has always been safe, which is very important. The profit cushion is an important measure for stabilizing mentality.

This also indicates that he handled losing trades very promptly and has a very low tolerance for losses.(2) The net value curve began to rise rapidly in mid-August, accumulating the vast majority of the profits for the entire competition in just over a month, indicating that he is very resolute in holding onto profitable positions, capable of capturing significant profits when encountering major market movements, resulting in a high profit-to-loss ratio.

B: Risk Level.

Exorbitant profits are inevitably accompanied by heavy, even full, positions, which is also reflected in the trading of "Chasing the Wind."

The above image is a risk level statistics chart of his trades, where the 100 mark indicates that the account is fully invested, and essentially his operations are above 80% of the position, basically going full position upon opening a position.

Additionally, he does not operate every day, with some periods of being out of the market.

C: Monthly Net Profit Changes.

The above chart is a bar graph of the monthly net profit changes in his trading, where he made a profit of 20,000 in April, 25,000 in May, a loss of 15,000 in June, a profit of 166,000 in July, 413,000 in August, and 486,000 in September.

Starting from July, he began to surge in profits, and consecutively made high profits in August and September, ultimately helping "Chasing the Wind" to win the championship.

From this table, it can be seen that trading profits are uneven and unstable, sometimes more, sometimes less, and sometimes even incurring losses. The idea of wanting to make money every month, every week, or even every day is impossible to achieve.

D: Trading Instruments.Throughout the competition, Zhuifeng traded a total of 34 varieties, but the main profits came from soda ash, lithium carbonate, and urea. Among them, lithium carbonate made a profit of 619,000, accounting for 31% of the total profit, soda ash made a profit of 533,000, accounting for 26% of the total profit, and urea made a profit of 280,000, accounting for 14% of the total profit. The gains and losses of other varieties were minimal.

Summary:

(1) He traded 34 varieties, and only three of them generated significant profits. In a six-month competition, only three months had substantial profits. This full-capacity, high-profit trading model relies on a few trades to make the main profits, with other times and varieties being mere accompaniment. This essentially confirms the trading logic that "5% of the trades make 95% of the profits."

(2) Out of the 34 varieties and six months of trading, the vast majority of trades were unremarkable, with gains and losses coming in cycles. However, during this time, it is crucial to persist with execution to capture the significant profits, which is a great test of patience.

So where do we usually lose money? We lose it because we are too concerned with our gains and losses. As soon as there is a slight drawdown, we become anxious and restless, unable to stop ourselves from worrying and second-guessing. We are reluctant to cut losses and hold onto positions we should, doubting that our methods or the market has gone wrong, and constantly changing our approach. This is the original sin of losing money.

3. The trading process of the heavyweight champion "WDD":

1: Trading process.

To briefly outline his main trading process.

On the day of the competition, he made his first trade, buying glass futures at a cost price of 1635 yuan. After several days of fluctuation, the glass futures showed signs of stabilization, and on April 13th, he went all-in on long positions in glass.In the following trading days, the market surged by 17%, and on April 25th, the glass long positions were closed at a price of 1875, resulting in a profit of 4.3 million, doubling the principal.

The chart is the daily K-line chart of soda ash.

After a significant drop in June, the soda ash futures stabilized at a low level, and gradually built up positions in soda ash futures. By the end of June, the positions were fully invested, and in July, the soda ash futures initiated a bullish trend. WDD noticed that the soda ash futures were lagging at high levels at the end of July and closed the long positions, leading to a retreat in the soda ash futures.

After the retreat ended, on August 8th, WDD continued to heavily invest in long positions in soda ash, and subsequently, soda ash experienced a high point, with an increase of 50%. WDD's account grew at a frantic pace of 5 million per day, and on September 1st, near the limit-up price, all long positions were closed, resulting in a profit of 65 million.

2: Trading results.

"WDD" entered the competition on March 31st with an initial principal of 2.4 million, accumulating a profit of 80.83 million. Throughout the competition, there were 90 days of profit and 34 days of loss, with a trading win rate of 72%. The longest consecutive profitable days were 12, and there was only 1 day of consecutive loss.

The largest single-day loss was 4.8 million, the highest daily return rate reached 35%, the average daily return rate was 3.5%, and the maximum drawdown was 28%.

3: Trading data analysis.

A: Net value growth curve.

The chart above shows the curve of the account net value growth for "WDD" throughout the competition process.This is an exceptionally excellent net value growth curve. It has been consistently upward from the very beginning of the competition, albeit at a smooth and slow pace, but very stable, especially during the first half month of the competition, the capital curve steadily climbed, forming a capital cushion.

In the later stage, starting from mid-August, profits began to be pulled, and there were no particularly large drawdowns throughout the trading period of the entire competition.

This indicates two issues:

(1) The entry points chosen by WDD are very precise, and the entry points are also the starting points of the market trend.

(2) The stop-loss control is very strict.

B: Risk level.

From this statistical chart of risk level, it is evident that WDD's risk control is better. During the entire trading period, more than 80% is considered a relatively low high position.

It has to be said that there is still a difference between trading with large funds and small funds. Due to the size of the funds, large funds must have stricter risk control and lower risk levels than small funds.

Comparing the net value and risk level data of Chase the Wind and WDD, WDD achieves a higher profit rate with a lower position ratio, fully demonstrating that WDD's point grasp and risk control capabilities are stronger than Chase the Wind.

C: Monthly net profit changes.The chart above illustrates the monthly net profit changes in a transaction, with a profit of 4.42 million in April, a loss of 860,000 in May, a profit of 4.72 million in June, a profit of 7.99 million in July, a profit of 44.2 million in August, and a profit of 20.24 million in September. Even top-level traders, such as the champion of the heavyweight group, experienced a month of net loss, which once again highlights the unstable nature of trading profits.

D: Types of trades.

Throughout the competition, WDD traded a total of 21 types of products, with his profit sources being more concentrated. Soda ash contributed the vast majority of the profits, with a profit of 68.55 million, accounting for 73% of the total profits. Glass brought in a profit of 23.01 million, accounting for 24% of the profits. Together, these two types of products generated 97% of the profits, while other products were essentially for finding a feel for trading.

4: Summary:

Seize key opportunities.

Although WDD only traded 21 types of products, he heavily invested in opportunities he understood and held positions firmly, making significant profits in key opportunities. From his risk statistics table, it is clear that WDD's position ratio is not high most of the time, and he only goes heavy or even full when he sees key opportunities.

To be light and heavy, to be tense and relaxed, to give and take, is the way of trading.

4. While the profits from the futures competition are tempting, the losses can also be devastating."Chi Yi Zi Pi" is the contestant with the highest losses in the entire futures competition. Starting the competition day with a futures account of 6.8 million, they incurred a loss of 43.8 million over six months, averaging a daily loss of 330,000, with a loss of 51 million specifically in stock index futures.

The phrase "One success is built on the bones of many failures" is not an exaggeration when describing futures trading. Sometimes, a single misstep can lead to a total loss, which is the reality of this industry.

The lightweight group competition is even more brutal.

The total capital of the lightweight group is 6.8 billion, accounting for 19% of the total capital size, yet it generated 1 billion in transaction fees, representing 50% of the total transaction fee size. The total loss is 1.9 billion, even exceeding the total competition loss of 1.7 billion.

The transaction fees and losses generated by the lightweight group reached 2.9 billion, almost 50% of the lightweight group's capital, indicating that the more retail investors there are, the more they prefer frequent trading. They think that because their scale is small, they do not cherish it and trade recklessly, chasing gains and cutting losses, leading to severe losses.

The losses of the lightweight group accelerated from May, and looking at the commodity index, this period also coincides with the phase when the market was trending in one direction.

Therefore, retail traders are more accustomed to contrarian bottom-fishing operations in a one-sided market, or not stopping losses and instead buying more against the trend, which is also the main reason for the losses of retail traders.

Do not over-interpret the futures competition.

The main purpose of today's article is to remind everyone of the risks of trading, to summarize the strengths of profitable traders for our learning, but we should not over-interpret the futures competition, nor should we want to become someone else. Seeing the profits they have made, we should not be tempted to act impulsively. We must still position ourselves correctly, do our best, and earn the money we can make.