Why do so many people like to add positions with floating profits, isn't such a reversal likely to lead to floating losses more quickly?

I randomly saw a friend answer this question, so I came to join the fun.

I don't quite understand most of the answers in this response thread. Most people are answering 'need to add positions while having floating profits', but in fact, it’s the other way around: 'most of the time when I add positions, I actually have floating profits'.

I don’t add positions because I have lost or made money, I only add positions when I believe 'I see it correctly + I am confident'.

For me, adding positions and opening positions mean the same thing. Regardless of whether there is a position in the same direction, I enter when I believe 'there is a good risk-reward ratio and a good win rate here'. In a sense, it’s also the 'basic skill' of large positions? Otherwise, how would you do short-term trading with your base position... I have an article below, it seems to be called 'How Large Funds Avoid Impact Costs', where I wrote in detail. If you're interested, feel free to look it up; I've written about it.

Don’t say adding positions with floating profits; adding positions with floating losses is the same. If the price is in a range and I want to break upwards. I initially thought the price wouldn’t return to the bottom of the range, so I bought in the middle of the range. If the price returns to the bottom of the range (equivalent to floating losses on previous positions), and I still want to break upwards, I will still add positions. Because my decision is 'to break upwards in the range', and until there’s a downward break, my decision hasn’t been wrong. Regardless of whether I was in floating profit or loss before, I have to maintain the mindset: 'If I don’t have a position, would I want to enter here?' If my answer is 'definitely would enter if I had no position', then regardless of whether I was losing or winning previously, the decision at this point is the same.

And this example on the other hand is assuming I’m aiming for an upward breakout. If there are two consecutive failed breakouts, would you enter on the third attempt? The essence is still the same; if the momentum on the third breakout is significantly stronger than the previous two, then I will attempt the third breakout. This isn’t about how much I lost before; it’s about every time I believe 'the probability of this breakout feels higher than before', I will execute a breakout strategy.

So as I said at the beginning, the essence is 'most of the time when I add positions, I actually have floating profits', not 'adding positions while having floating profits'. Moreover, I previously wrote in those articles about position management: 'It’s not that having floating profits means I’m right; rather, having floating profits at least proves that I’m not wrong'. After all, my stop-loss is placed at 'I believe my judgment will be wrong if the price reaches here', not a percentage stop-loss or maximum drawdown stop-loss. So as long as the price doesn’t hit my stop-loss, my judgment hasn’t been wrong.

Of course, in actual operations. If I have a strong distrust of this trade as prices develop, I will also reduce my position early. I usually reduce my position first and most likely won’t exit completely directly, and I won’t move my stop-loss at the beginning. You’re clearly not wrong, why increase your loss exit probability?

Moreover, I don’t move my stop-loss just because I’ve made money. If I go long, it’s because the price has entered the next development phase, and I place the stop-loss at the point where strong buying pressure was shown in the previous stage. I can’t remember which article I wrote it in; anyway, whatever, the stuff I write often doesn't get many likes.

So you will find that my trading philosophy differs from that of most people in this response. As I mentioned in my previous article, the ideas about position management for retail investors and those from institutions are quite different. However, since I have a large amount of capital, my actual capital utilization rate is much lower than that of retail investors, resulting in a leverage ratio smaller than that of general retail investors. Therefore, I can endure losses until my judgment is proven wrong. But small retail investors may not be able to endure, so setting a limit on 'I can only tolerate losing this much money at most' is understandable. After all, I have a small plugin I wrote myself that automatically sets an emergency stop-loss when I enter the market, as I have also experienced internet outages. But if we continue this topic, it comes back to the question, 'For large funds, the risk-reward ratio is more important than the win rate'. So this goes back to my previous articles.

So the concept of stop-loss cannot be said to be right or wrong; it can only be said to be different.

If you want to ask, how do you know where to enter? Where to add or reduce positions? That’s a matter of skill; subjective trading essentially does just that.

For example, a few days ago, a reader asked (not to point fingers, just reminded me when writing this article) the question: 'I recently converted all my tech stocks into precious metals and rare earths. Because I’ve been wanting to do ultra-short trades, but the teacher selling me the course keeps emphasizing that we should do medium to long-term trades and not trust our intuition. This contradicts your answer a bit.'

Answer: 'For you, your teacher is right because you haven't stared at the screen for 1000 hours. If you have more than 1000 hours of screen time + a good profit curve (or line), then what I’m saying is right. We never rely on intuition in trading but on experience. But if you lack experience, then you only have intuition? The only time you really need intuition is in cases of 'emergencies'. In such cases, there are often no precedents to follow, so you need some intuition. But my intuition is also based on experience, so without experience, you’re still talking nonsense. A minimum of 1000 hours of high-intensity screen time + at least 10,000 round turns (each buy and sell counts as one RT), you can say that you roughly have some experience, then you won’t need to care about what your teacher says. It’s very likely that at that point, their experience is not as rich as yours.'

Still the same saying, 'Whether you make money or not depends on strength, how much you make depends on luck.'

But I’ve seriously gone off-topic, so I’ll stop here for now.

Just remember 'it’s not when you have floating profits that you add positions, but when adding positions, most of the time there are floating profits.' This question actually ends here.

Some readers asked why some previous articles are gone. Some articles I felt I wrote poorly have been removed; I generally leave a shell for commemoration. Others were initially visible when published but may have changed later, causing the article to be flagged, so you can’t see them now.

In the past, some topics might have been discussed in a roundabout way and still got sent out. In the past two years, AI has advanced significantly, and now it's mostly AI review. This means that if the encryption level of my article is sufficient, many people may not understand it. If I don't encrypt it enough, then the article won't be sent out. Additionally, writing is a completely unpaid effort with no return, and my time is really precious. Even if I do nothing, playing with butter is at least a reward for myself. So I have removed all articles that comment on current events.

As for why I removed some trading-related articles, it’s because what I discuss is primarily subjective. I often mention that the skill sets required for different time frames are completely different. The theories for short-term and medium to long-term trading are not the same. Unfortunately, not everyone can understand what I’m saying, and there are often people who do medium to long-term trading who confront me in the comments, calling me a scammer, and some even come to my private messages to insult me. Really, there are all kinds of people. Often, when I see it, I get angry, and I try to explain to them why I understand it this way, hoping to help them comprehend some of my views on different trading methods. But this effort is often thankless. Sometimes, after explaining it once, they realize it’s their misunderstanding or an outsider instructing an insider that leads to their abrupt comments, and then they delete their comments (they silently delete their comments but don’t apologize), resulting in the disappearance of my comments that helped them understand the market. The outcome is that, to the outside world, it seems like this conversation never happened, but I indeed spent time and opportunity costs, feeling very helpless.

Even more so, especially some people who focus on price-centric technical analysis theories love to say what I did wrong and how I should act. I have always emphasized that technical analysis is basically never wrong; it’s just a matter of when to use it. Some are suitable for high volatility, some for low volatility, some for strong technical stocks, and some for fundamentally strong stocks. You can't simply treat all stocks as random walk line graphs without distinguishing between stocks and market backgrounds. However, with the increasing frequency of 'teach me how to trade' requests in the comment section, I can only reply, 'Well, someone is here to teach Jay Chou to sing again. Everyone has their own way of making money; the market is so large that it can accommodate both of us. You earn your way, I earn mine, and I wish you make a hundred million every day with the fifth set of RMB.' No matter how much is said, just wish you well.

So I screened my previous articles and removed those that easily cause ambiguity between 'short-term concepts and medium to long-term conflicts', as well as those I felt were poorly written or likely to cause controversy. This way, the articles you see are those I believe are well-written, so no one can nitpick, and I won't be upset, which would be counterproductive. After removing the articles, it directly avoids anyone being able to pick faults, solving the 'problem' right from the source, which is pretty good.

Please, if you think my writing is okay, give me a thumbs up... A thumbs up may not be a big burden for you, but it’s a huge encouragement for me, thank you!

If you want to support me, I don’t take your money, just go to my article list and give a few articles and answers a thumbs up, thank you!

Below are my previous article recommendations. If you're interested, feel free to browse (divided into 'pure trading articles' and 'financial literacy articles'). Generally, they're written quite well and won't waste your time.

Previous pure trading articles.

Undefined: Subjective trading is essentially 'telling a story that is currently happening', but most people don’t even know what should be included. About how to specifically train market sense, and my practical methodology.

Undefined: Choosing to trade for a living? Doubling is not about luck, you can do it too, but the process is different from what you think. Decoding the stories that many day traders have experienced.

Undefined: A systematic explanation of trading and investing - the core concept differences between investing and trading (must-read for beginners).

Undefined: Why do so many people like to add positions with floating profits, isn't such a reversal likely to lead to floating losses more quickly?

Undefined: How to trade during the regular release of data, press conferences, breaking news, and conferences (first part).

Undefined: How to trade during the regular release of data, press conferences, breaking news, and conferences (next part).

Undefined: Subjective trading, technical analysis, quantitative trading, in the end, all lead to the same destination (plus the limits of the so-called 'methodology').

Undefined: In professional trading, the risk-reward ratio is more important than the win rate, not about taking big risks, but experienced traders will only act when the win is high and the loss is high. How to correctly establish a risk-reward ratio in professional trading.

Undefined: External trading is the child of the current version. About why it’s the same regardless of whose order flow course you learn.

Undefined: The reasons why adding positions with floating profits is inadvisable.

Undefined: The core of professional position management - article 1.

Undefined: The core of professional position management - article 2.

Undefined: Why do so many traders go to teach classes, what’s their level and mentality in teaching? Isn’t it better to do trading themselves? (not an advertisement, just discussing industry phenomena).

Undefined: A brief discussion on how professional traders handle/trade in volatile markets.

Undefined: Judging whether the market is 'reasonable' in the face of trends.

Undefined: Several methods large funds use to reduce impact costs.

Undefined: How to identify/utilize large capital's iceberg orders - practical strategies against strong absorption areas.

Undefined: Quantitative practical skills that monkeys can understand (no programming experience required, can be used directly).

Undefined: In trading, is technical analysis a dead end?

Undefined: About the dark pool of US stocks (or just guessing whether the emperor plows the land with a golden hoe every day).

Undefined: How professional traders prepare before the market opens, keep records during trading, and review afterward.

Undefined: How to correctly use order flow, how to combine different technical analysis methods - finding the best trading intervals through correct expectations and intraday analysis.

Undefined: Responses to private message inquiries (1): Various technical aspects.

Undefined: Responses to private message inquiries (2): Should one pursue a career in trading?

Undefined: Responses to private message inquiries (3): Understanding price development? Is niche markets really easier to trade? Does the catch strategy work in overseas markets?

Undefined: Responses to private message inquiries (4): About slow breakthroughs, should we predict the market, and where to find props?

Undefined: Recent Q&A summary on macro finance and specific trading (1/3).

Undefined: Recent Q&A summary on macro finance and specific trading (2/3).

Previous general knowledge articles (including non-trading-related).

Undefined: Clearly, long-term trading is easier to make money in, so why are retail investors more obsessed with short-term trading?

Undefined: The reasons why adding positions with floating profits is inadvisable.

Undefined: How to evaluate the authenticity of the latest episode of 'Peak Brother's Dangerous Journey' (the dropout brother, from network administrator to futures trader, worth 10 million at 30 years old)?

Undefined: Learning from history, reviewing and interpreting the market turmoil in March 2020 (short-term perspective).

Undefined: Research on common casino game types (part 1 & 2).

Undefined: Research on common casino game types (part 3).

Undefined: Research on common casino game types (part 4).

Undefined: What is the difference between speculative trading in futures and gambling? (part 8)

Undefined: How to use casino games to quantify a person's current luck and apply it to trading and life (part 9).

Undefined: What is prop 'self-operated trading', what is a large trader room? What kind of environment do professional traders work in? What is market-making strategy?

Undefined: 'The game' and 'the cost', an expansion towards life.

Undefined: How do self-operated trading, private equity, and hedge funds prevent high-quality strategies from leaking?

Undefined: Joining professional trading (first part, about the science of trading itself).

Undefined: Joining professional trading (next part, about raising investments and other topics).

Undefined: Why would someone be willing to be an options seller (with slim profits and unlimited losses)?

Undefined: When making money, where is luck and where is skill? How to define it?

Undefined: What to do if the RMB exchange rate has dropped (or risen) again.

Undefined: The so-called strategy of being able to call the bottom for a lifetime, about 'catching the falling knife', inflation, and the risk tolerance ceiling of retail investors.

Undefined: How to quantify a person's current luck from a statistical perspective and apply it to trading and life.

Undefined: A cold splash of water thrown at those who hope to do quantitative trading in isolation at home.

Undefined: Stories of those traders who cannot keep up with the times.

Undefined: What is monitor delta E? Gamma? HDR? White balance? Adaptive sync? The 'low latency mode' in graphics cards?

Undefined: The essence of traders, how traders judge trends, how much position do Prop traders actually have.

Undefined: The 50-year ultra-long-term special treasury bond is back; why issue ultra-long-term bonds? When will the interest rate cut and reserve requirement drop take effect?

Undefined: Regarding the return to the gold standard, continuing with fiat currency, and the MMT (Modern Monetary Theory) that has already stepped into unlimited money printing.

Undefined: Is it feasible for the central bank to write off local debts?

Undefined: A brief discussion on the impact of negative interest rates on the banking industry, social behavior, and economic activities.