Just because you cut losses doesn’t mean it will lead to further capital increases
There are people who mistakenly think that you can increase capital if you cut your losses
That ultimately ends up being just another way to preserve profits when you manage to leave profits in the market as well
In the market, there are overwhelmingly many opportunities to cut losses
With averaging down (nampin), the logic is as if you have abandoned cutting losses, so there are fewer opportunities to cut losses
However, if you look at the market with a fixed stop loss in mind, you can see that
whether you go with trend-following or contrarian strategies, there are overwhelmingly many opportunities to cut losses
Such facts are formed even when looking back at past markets
There are many opportunities to cut losses
And whether you can extend profits depends on randomness in the market
Random walk is built from the presence or absence of such market behavior
So the phenomenon is a random walk
It would be nice if you could predict trends
Even predicting is, to extreme, just a fortune-teller’s guess
That’s why signal delivery tends to miss
We must internalize the single fact that there is no absolute in the market
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