The evolution of trading strategies has roughly gone through three stages, each transition directly related to the pitfalls encountered and losses suffered, reflecting upgrades in mindset and understanding:

First Stage: Obsessed with the 'Holy Grail,' chasing signals

When first starting out, there was always the belief that 'a good strategy = high win rate,' leading to an obsession with various combinations of indicators (such as MACD + RSI golden crosses and death crosses, Bollinger Band breakouts), staring at the market every day looking for signals, trading frequently, feeling the strategy is great when making profits, and changing indicators when losing. The result was a pile of transaction fees, a rollercoaster account, and constant frustration from 'missing signals,' causing significant anxiety.

Key Transition: Realizing that 'win rate ≠ profit,' the true determinant of profit and loss is the 'risk-reward ratio.' For example, in 10 trades, 4 are profitable and 6 are losses, but each win earns 3 units and each loss loses 1 unit, leading to long-term gains. This shifted my focus from 'finding winning signals' to 'accepting losses and maximizing profits.'

Second Stage: Focusing on 'rules,' cutting off emotions

After understanding the importance of the risk-reward ratio, I began to establish strict trading rules: for instance, only trading 2 familiar instruments, entering trades only when both 'trend + volume' conditions are met, setting stop-loss just outside recent highs and lows, and taking profits in two batches (one part to break even, one part following the trend). However, during execution, I often couldn't resist 'manual intervention'—for example, adding positions when the stop-loss was nearing, thinking 'this time it will definitely rebound,' which turned small losses into huge losses.

Key Transition: Treating 'rules' as a 'lifeline,' using mechanical execution to combat human weaknesses. Later, I even trained on a demo account for a month 'only placing orders according to rules, not checking account profits and losses,' gradually discovering: when you stop obsessing over individual wins and losses, and focus on 'doing the right thing,' long-term results become more stable. My mindset also shifted from 'fear of loss' to 'fear of violating rules.'

Third Stage: Adapting to 'changes,' leaving room for error

The market always has black swan events (such as sudden policies or liquidity crises), and even the most perfect rules can fail. Once, I followed a trend strategy to go long, but encountered extreme market conditions that gapped down, directly breaching the stop-loss line, resulting in losses equivalent to the profits from the previous three trades. This made me realize that 'strategies are not rigid; one must leave room for errors in the market.'