Assuming you decide on the long or short position before every trade by flipping a coin, meaning the direction is random.
If your stop loss is 10% and your take profit is only 1%, then trading this way can easily yield a win rate of over 90% in the long term.
If your take profit is 10% and your stop loss is only 1%, then your win rate could drop to 10%.
But interestingly, regardless of which model above, some people have made a lot of money.
The former is a strategy for high win rate short-term players, while the latter is a strategy for low win rate trend players.
Now it's obvious to answer the question 'Why am I always stopped out?'
Because the take profit is set too high while the stop loss is set too low, wanting to capture the profits from trending markets while also maintaining a high win rate in short-term trading is fundamentally impossible.
When you choose to do trend or breakout trading, you should consider frequent stop losses as a norm; the stop losses themselves are part of the cost of trading, just like starting a restaurant, from the initial renovations, hiring staff, promoting, to actually starting operations, all of these require investment before you can profit.
And when you choose to do short-term or scalping trading, you should regard missing out on most of the profits from trending markets as the norm.
Risk-reward ratio, win rate, trading frequency—this is the 'impossible triangle' in trading.
Arbitrarily increasing the value of any two of these metrics will inevitably lead to a significant decrease in the value of the third.
High risk-reward ratios and high win rate trades do exist, but encountering them even once a year is very difficult (the frequency is extremely low and not easy to grasp).
Strategies that involve frequent trading and high win rates do exist, but they basically can only earn a little bit.
Strategies with high risk-reward ratios and high trading frequencies do exist, such as trend following, but this model has a very low win rate; you may incur losses in choppy markets, but as long as you persist until the trend arrives, you can earn it all back in one go!
So what we need to do is choose a model that suits us, and then refine it.
If you have a strong will and can endure multiple stop losses without being discouraged, then you are suited for trend trading.
If you have a strong sense of pride and find it easy to get emotional after a stop loss, leading to a blow to your confidence, then you are suited for short-term trading.
If you have excellent patience and the perseverance of a hunter, then you are suited for long-term trading: buying during deep bear market crashes and holding for 4-5 years, then selling when a crazy bull market occurs, with trading frequency dropping to once every 4 years.
So, are you afraid of being stopped out now?
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