Don't look for a "strategy to avoid losses." Create a "strategy...
Yumi🌸@samuraipips358
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Feb 24, 2025
~3 min read
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Don't look for a "strategy to avoid losses." Create a "strategy that remains profitable even through losses"🧵
It's impossible to avoid losses, but it's still possible to increase your funds.
↓ Thread 1/4
It's impossible to avoid losses, but it's still possible to increase your funds.
↓ Thread 1/4
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The idea of "looking for a strategy to avoid losses" may seem rational at first glance.
However, this is nothing more than a fantasy that completely ignores probability theory.
Because the market is influenced by randomness and is uncertain.
- No matter how excellent the entry, there are times when you lose
- No matter how perfect the strategy, consecutive losses will always exist
- No matter how skilled the trader, consecutive losses are unavoidable
Yet, what happens if you continue to seek "methods to avoid losses" or "strategies that win 100% of the time"?
👉 You become too selective with entries and miss opportunities
👉 You lose with carefully selected entries and lose confidence
👉 You can't withstand consecutive losses and quickly change methods
👉 You discard the method at the slightest drawdown, saying "this method is no good"
As a result, consistency collapses, and you constantly change strategies, but as long as you repeat these actions, no matter how advantageous the strategy is, you will constantly abandon it due to unavoidable consecutive losses and drawdowns, and you will not be able to win no matter what you do.
The idea of "looking for a strategy to avoid losses" may seem rational at first glance.
However, this is nothing more than a fantasy that completely ignores probability theory.
Because the market is influenced by randomness and is uncertain.
- No matter how excellent the entry, there are times when you lose
- No matter how perfect the strategy, consecutive losses will always exist
- No matter how skilled the trader, consecutive losses are unavoidable
Yet, what happens if you continue to seek "methods to avoid losses" or "strategies that win 100% of the time"?
👉 You become too selective with entries and miss opportunities
👉 You lose with carefully selected entries and lose confidence
👉 You can't withstand consecutive losses and quickly change methods
👉 You discard the method at the slightest drawdown, saying "this method is no good"
As a result, consistency collapses, and you constantly change strategies, but as long as you repeat these actions, no matter how advantageous the strategy is, you will constantly abandon it due to unavoidable consecutive losses and drawdowns, and you will not be able to win no matter what you do.
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What is necessary to survive in the market is not a "method with a 100% win rate," but a "method that remains profitable even through losses."
To achieve this, there are only three points to grasp.
① Win rate and risk-reward create profit.
Many beginners mistakenly think that "high win rate = good method."
However, it is possible to remain profitable even with a low win rate, and what matters is the balance with the risk-reward.
Even with a win rate of about 45%, if the risk-reward ratio is 2 or more, profit remains, and on the other hand, with a strategy where the risk-reward ratio is 1, if the win rate is 55% or more, profit remains.
You just need to continue trading only where the market direction or pressure is biased in one direction.
② "Consistency" to draw out the system's edge
The system's edge (statistical advantage) is only demonstrated through the law of large numbers.
In other words, unless you perform a certain number of trades, neither the win rate nor the expected value will function.
In a market strongly influenced by randomness, what draws out your edge is consistency, and to make the system function and draw out the edge, "continuing to follow the same rules" is an absolute condition.
③ Position size management to avoid bankruptcy
To consistently continue the same trades, a position size that allows safe long-term trading is essential.
Try to limit each loss to a certain percentage.
Through your prior testing with a large sample size, determine a safe position size in percentage terms based on the strategy's potential consecutive losses, drawdowns, win rate, etc., and continue to adhere to it.
This will create a foundation for probability to work in your favor.
What is necessary to survive in the market is not a "method with a 100% win rate," but a "method that remains profitable even through losses."
To achieve this, there are only three points to grasp.
① Win rate and risk-reward create profit.
Many beginners mistakenly think that "high win rate = good method."
However, it is possible to remain profitable even with a low win rate, and what matters is the balance with the risk-reward.
Even with a win rate of about 45%, if the risk-reward ratio is 2 or more, profit remains, and on the other hand, with a strategy where the risk-reward ratio is 1, if the win rate is 55% or more, profit remains.
You just need to continue trading only where the market direction or pressure is biased in one direction.
② "Consistency" to draw out the system's edge
The system's edge (statistical advantage) is only demonstrated through the law of large numbers.
In other words, unless you perform a certain number of trades, neither the win rate nor the expected value will function.
In a market strongly influenced by randomness, what draws out your edge is consistency, and to make the system function and draw out the edge, "continuing to follow the same rules" is an absolute condition.
③ Position size management to avoid bankruptcy
To consistently continue the same trades, a position size that allows safe long-term trading is essential.
Try to limit each loss to a certain percentage.
Through your prior testing with a large sample size, determine a safe position size in percentage terms based on the strategy's potential consecutive losses, drawdowns, win rate, etc., and continue to adhere to it.
This will create a foundation for probability to work in your favor.
4
4/4
Looking for a "strategy to avoid losses" is an act of denying the market's uncertainty.
There is no "method that absolutely wins" in the market.
So, what should you do?
✔ Balance with risk-reward, not win rate
✔ Maintain "consistency" to draw out the system's edge
✔ Build a large sample size safely and long-term with a position size that avoids bankruptcy
Through these three, a strategy that remains profitable even through losses is created.
If you are currently looking for a "strategy to avoid losses," that is undoubtedly a dangerous path.
Creating a "strategy that remains profitable even through losses" and consistently executing that strategy.
That is the professional's way of thinking.
Thanks for reading!
If you enjoyed this thread, check out my books on trading.
【THE PATH TO SUCCESS IN TRADING】
E-book:payhip.com/b/H1ZBo
Paperback:a.co/d/fXmRhIa
【Trading Psychology】
E-book:payhip.com/b/SNnJC
Paperback:a.co/d/d0QJMxK
Hope these insights help your trading journey 😊
Looking for a "strategy to avoid losses" is an act of denying the market's uncertainty.
There is no "method that absolutely wins" in the market.
So, what should you do?
✔ Balance with risk-reward, not win rate
✔ Maintain "consistency" to draw out the system's edge
✔ Build a large sample size safely and long-term with a position size that avoids bankruptcy
Through these three, a strategy that remains profitable even through losses is created.
If you are currently looking for a "strategy to avoid losses," that is undoubtedly a dangerous path.
Creating a "strategy that remains profitable even through losses" and consistently executing that strategy.
That is the professional's way of thinking.
Thanks for reading!
If you enjoyed this thread, check out my books on trading.
【THE PATH TO SUCCESS IN TRADING】
E-book:payhip.com/b/H1ZBo
Paperback:a.co/d/fXmRhIa
【Trading Psychology】
E-book:payhip.com/b/SNnJC
Paperback:a.co/d/d0QJMxK
Hope these insights help your trading journey 😊