Ways to Improve Your Profit and Loss Ratio! (You Must Overcome This)
Usually, when most people trade, they get the direction wrong. 99% of people will choose to average down. For example, if they go long and the price drops, they will hold on at first, and when it drops further, they will add to their position to lower the average price, thinking that as long as there is a rebound, they can break even. If they average down correctly, they will run away after making a little profit because they have endured the loss, and their mindset is already poor. However, if after averaging down the price continues to drop, they are losing double, and if they continue to hold on, it is highly likely they will face a margin call, ultimately losing even more.
Today, I have a suggestion for everyone. Even if your win rate is only 20-30%, there is still a way to make money.
If you open a position and incur a loss, a small loss may not be felt because you have an expectation of loss. When the price reaches a point where you feel like you are holding on, you must definitely cut your losses because when you think you are holding on, the position has already reached your threshold of tolerance. At this point, you need to be decisive. Conversely, when you open a position and the price moves in your favor, many people will take a small profit and run, not realizing that there is still a big profit waiting. This is a classic case of making small profits and large losses, resulting in a poor profit-loss ratio. Even if you have an 80% win rate, you can still end up losing money continuously! So what should you do? When you want to run after making a profit, that is when you should add to your position for the first time, which is to roll your profits. Don't be greedy; add to your position little by little with a target expectation. Add in batches, for example, if you go long and the price rises a bit, add some, and if it rises some more, add again. This is the fastest way to profit. Most people get it exactly the opposite: they hold on to losses and run at small profits, which is why it is difficult to make money!
Starting today, I hope that those who see this article can try this method and see if it can help you a little. If it doesn't work, feel free to come back and criticize me.
