The Theory of Self-Destruction in the Market

Nampin and round-trip—both only end in self-destruction

It’s just about whether you end up with a huge loss or after experiencing losses a few times

This is said on the premise that you cannot utilize the logic of averaging down or turning around

If it’s a single shot, there is no reason not to use a stop loss

A single shot is balanced, so it doesn’t become either profit or loss — that’s the impression

In the case of a single shot, please either set a stop loss or hedge to preserve the loss

As a result

It’s appropriate to hold both a trend-following and a counter-trend logic

Because you often lose when exchanging positions

Round-trip = ends in a loss

Averages down = big loss

Both end in round-trip loss or big loss, because you self-destruct on losses—that’s all

So

Trying to do averaging down or turning around isn’t a problem in itself

But it was a failure because you self-destructed on losses

It’s about making it so you don’t self-destruct on losses

Market intuition itself isn’t wrong

I think you can acquire market intuition after trading for several years

I happened to internalize it once I noticed it

Then

A heart that doesn’t mind stop losses

And

A rule that allows time-based waiting

And

An active trading mindset that remains even with that

I think such emotions are necessary

As a logic that supports both trend-following and counter-trend,

If stop loss is used, one shot

If not, engage in averaging down or turning around

Everything is discretionary trading based on market intuition, doing it without self-destructing on losses

Losses will be managed by waiting for opportunities up to three hours, for example

To prevent self-destruction of losses, this is strictly observed

If you’re going to do a single shot, it’s appropriate to fix the stop loss

A single shot assumes a stop loss

The more volatile the market becomes, the more that feeling applies

If you do both contrarian and trend-following, you’ll lose in both

Counter-trend loses; averaging down loses

Trend-following wins

If you’re basically in a trend-following posture, it’s okay to become counter-trend

Trend-following of trend-following and trend-following of counter-trend ○

Counter-trend of trend-following and counter-trend of counter-trend ×

Never forget this concept

One thing I can say,

Trend-following doesn’t necessarily win; I’m only looking at the results

Convenient post-hoc reasoning; it’s only because the market happened to be favorable

If trend-following keeps winning, the market shifts to a counter-trend regime

If counter-trend keeps winning, the market shifts to a trend-following regime

Even if you anticipate that shift and keep winning, the market may not shift properly

Contrarian logic and trend-following logic

Accurate systematic trading and automated trading have already been developed

Results are mediocre or winning but modest; and the results fade and end—that’s all

Conversely, if the results are superb, then it’s simply guaranteed profit, of course, right?

In the end, you decide where to trade based on market discernment, or you extend profits; that’s all

If you consider the automatic trading concept of “why performance doesn’t improve,” you’ll understand

↓ Factors of losing

A logic that can be automated into systematic trading

Profit fixation

Trend-following logic and contrarian logic

If you trade by setting rules, both yield only mediocre results

Because it becomes easier to take losses, due to poor entry timing

When you move ignoring technicals

If you chase profit, you’ll go against the trend and fail

Is it necessary to hold trend-following and contrarian logics?

Markets that move two yen continuously, or contrarian markets that move up and down by one yen

All kinds of noisy, technically-ignored markets are created—that’s the market

And such markets can happen at any time

Do not formalize trading rules; instead, contemplate analysis methods based on market intuition

Because nothing is formalized, it’s fine to simply fix losses

Other than MA and envelopes, it ultimately becomes a conclusion of “techniques are useless”

The market can be expressed in price and time

With MA and envelopes alone, you can cover all trend-following and contrarian logics

Technical analysis stops functioning on 4-hour charts because

The analysis itself is based on 15-minute to 1-hour frameworks

The analysis isn’t really functioning; it’s just touching

More precisely, touching patterns simply represent patterns that appeared

And you don’t know when patterns will appear, and the analysis itself cannot enforce patterns

You can’t attach many envelopes

To keep it simple: two short-term and two long-term lines, i.e., four lines total

This enables price control

Then prepare tools to grasp the actual market momentum

Oscillators are just hard to understand

OSMA or similar indicators should display as a percentage above or below a threshold rather than just an oscillator

Stop loss = because of unnecessary stop-outs, trades become wasteful

Fixed stop loss at 20 pips

If you mis-timed entries and incur losses three times

To make a profit you must gain 60 pips

There is a concept of continuous winning, but if that existed, no one would struggle and everyone would be rich

However, as the results show, no one is winning with stop losses; some are slightly winning, but

Ultimately, once you add discretion, you cannot win with stop losses

You win by exercising discretion, and the logic can win with any approach

As loss factors

Wasted stop-out frequency

Wasted stop-outs

Wasted switching of entries

If profits increase, money disappears each time

Stop losses simply mean big losses are eliminated

Even with a direction in mind, stop-losses inflate wasted stop-outs, profits net to zero

When profits appear, it’s still roughly zero, so the more you do it, the more results decline

Because there is a notion of systematic trading or automated trading, stop losses in normal trading self-destruct

Stop losses are meaningless unless you restrict them to rare, chance-market opportunities

Moreover, chance markets are large-trend markets, so there’s no need for stop losses; you’ll just increase wasted losses

Stop loss isn’t even a stopper

When contrarian, you only avoid heavy losses, otherwise there’s no real advantage

The drawback is the unnecessary increase in the number of losses

True trading is

Even if it means hedging, you need a trading mindset where one-sided positions can be maintained

Being able to recognize both buying and selling

Stop loss is meaningless

Stop loss does not mean it’s a one-sided trade

It is one of the strategies of hedging; one of the devilish techniques

A logic that focuses on one-sided trades is the real thing; that’s why averaging down and pyramid averaging make sense

Stop loss can be a losing-player idea in itself

For stop loss to succeed

In a big-trend market

At the temporary high or low of a long-term market

That is all; there is no room for stop-loss trades otherwise

Trading a temporary high/low in a long-term market can lead to huge losses due to indicator reactions, so it’s gambling

It’s only because the market is moving in that direction

When you look at the market

A averaging-down system loses again

Averaging-down is only for scalping

Basically, a single-shot for both logics is appropriate

As I’ve looked at past markets and realized

A losing market will always come

There are few times when you can extend profits

There are many irrational markets

What you must avoid

Losing markets will always come

Because they will come, you must admit losses

You must consider how to deal with irrational markets when losses continue

Optimizing win/loss affects capital increases; you can implement measures so profits remain

Market sense toward the trend direction

Not by optimizing technical analysis, but by optimizing win/loss

Optimize gains and losses; thoroughly study wins and losses

Since these are probabilistic events, if you thoroughly optimize wins and losses, you can increase returns