Profit and loss pattern
Do not become more neurotic than necessary about individual losses.
If, over a certain period, such as six months or a year, the cumulative result is heavily negative, you should reassess the method itself, but it is natural for individuals to be affected, and even professionals face hardships without exception in reality.
Calmly think about the method you are using“the way profits and losses are produced”is important to understand.
If you focus on large, flashy price movements, you will incur fairly large losses, but the amount won when you win can be very large as well.
For example, the result might be a yearly profit of 10 million yen, a loss of 6 million yen, and a net of 4 million yen positive.
In contrast, with a more modest approach, the same 4 million yen in profit might be broken down as 5 million yen in profit and 1 million yen in loss.
There are also other perspectives.
If you do not fear missing opportunities and narrow your trades, you may miss chances for profit, but when you do take positions, your focus is heightened and you can respond with higher quality.
On the other hand, continuously entering positions, including small opportunities, and quickly cutting losses and moving on is also a way of trading.
It may be a difficult method, but this choice depends on personal preference and the practitioner’s direction.
If you limit entries, the image would be “2 losses, 8 gains”; if you deliberately increase entries, “20 losses, 20 gains.” However, which yields more total profit is determined not by these win-rate numbers but by the content.
Profit and loss outcomes vary greatly depending on the method itself, its operation, or stock selection. It is not possible to say which is best or more advantageous in general. You simply choose based on your preference and trading philosophy (the idea of how trading should be).
From a mental standpoint, it is generally better to have fewer losses in number and amount, but some players believe that if a strategy consistently yields a positive result, you should trade relentlessly, and in system trading that follows rules, this is considered the norm.
Regarding the method, rather than comparing on superficial superiority or inferiority,“what aspects are different”and analyze,“which one to choose”and ask yourself what is correct.
The method strongly promoted by the Lin Institute of Investment Research「Chugen-sen Build-Up Method」is that for both buying and short-selling, the rule is to divide into three equal parts.
When you judge that the trend has turned, you first build only one third of the planned quantity.
Division is a natural technique to limit losses when your prognosis is wrong.
Trading cannot be evaluated simply by win or loss.
Chugen-senis a method that starts buying after you determine the trend is moving upward, and starts short-selling after you determine it is moving downward. Indecisive wandering, or so-called “swinging” price movements, cannot be fully accommodated, and losses as expenses cannot be avoided.
Instead, when a price movement occurs, you can take large advantage.
■ Stock Investing [Tiger's Den] (Lin Institute of Investment Research Channel)
On February 16 (Wednesday), I uploaded the latest video.
Basic knowledge and fundamental techniques for profitability
【A Harsh Truth】Rules You Set for Yourself But Cannot Keep
In stock trading, there should be rules you set for buying and selling. Including “rules for each occasion.”
But when the conditions align, you cannot take action... especially with passive, negative actions like stop-losses being difficult to execute.
If you set rules to profit yourself but you end up rejecting them, let’s think about a solution!
■ YouTube Channel Market Scramble
Tonight, the latest video from Market Scramble will also be released.
Please watch at the URL below. Enjoy!!
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