In the (Mao Attack) chapter, we learned how to layout wisely to reduce hard fighting; while in the (Military Formation) chapter, Sun Tzu teaches us a higher-level concept:
"Victory can be known, but cannot be forced."
What does it mean?
—— Victory or defeat can be known in advance through situational analysis, but it must not rely on strong action or personal will to 'manufacture victory.'
In the trading world, this means: A good trader will predict trends, positions, structures, K-line patterns, and cycles in advance to foresee the outcomes of trades, thereby planning ahead. However, this does not guarantee victory, as while victory can be predicted, it cannot be forced; otherwise, one would be a deity. The market is complex and ever-changing. We should find unchanging rules within changes to achieve long-term compound returns. In this chapter, Sun Tzu presents several critical concepts: 1. Stand on the ground of invincibility, waiting for the enemy's defeat. "A good warrior stands on invincible ground and does not lose sight of the enemy's defeat."
1.—— Experts first ensure they do not lose; the rest only requires waiting for the opponent to make mistakes.
In trading, this means:
Risk control takes precedence over profit pursuit. Many people place orders driven entirely by emotions, which easily leads to passivity, exposing their positions to the market, equivalent to handing their back to the enemy. Preserving capital is the primary task; if the capital can't withstand pressure, profits will be impossible. Each order should not exceed 2% of total capital. Frequently taking action in disadvantageous markets (consolidation areas/high-risk areas) is the trader's greatest enemy, often leading to capital depletion. We should wait for high-win-rate patterns to emerge, wait for the market to reveal its flaws, and strike decisively; here, we should not hesitate, or we may miss the opportunity.
2. First, ensure invincibility, then wait for the enemy's vulnerability.
"Victory is achievable through oneself, but can be defeated by the enemy."
—— What we can control is not making mistakes, but we cannot control when the market will provide opportunities. In trading, I can manage my position, set stop-losses to avoid large losses. But I cannot force the market to move according to my expectations. Waiting for the market to mature and conditions to be perfect is the correct trading attitude.
3. Metaphysical warfare: Winning through positioning
Sun Tzu emphasized: "The victorious army wins first and then seeks battle; the defeated army seeks battle first and then hopes for victory."
A good army is destined for victory due to proper arrangements and favorable situations; while a defeated army blindly engages in battle, seeking temporary remedies.
In trading: Excellent trading = taking action only in high-win-rate situations. Failed trading = placing random orders, hoping the market aligns with oneself.
How to apply these thoughts in our trading
What is the trading behavior of 'standing on invincibility'?
🔹 Five essential conditions:
Have a clear plan
(instead of placing random orders to avoid blind trading)
Have clear stop-losses
(instead of 'waiting a bit longer, maybe it will come back')
Have reasonable positions
(Not risking total loss on one trade; surviving even after two consecutive losses)
Trend filtering
(Not in ambiguous situations, false breakouts, or recklessly trading in low market cap currencies)
Emotional control
(No greed, no fear, no revenge trading)
My situational judgment in trading scenarios
Clearly identify the trend (upward/downward). EMA20 strongly suppresses or supports; prices reach new highs/lows. Trade in accordance with the trend, finding low-risk entry points. Note: Always coordinate with timeframes and key levels. In a range, with concentrated upper and lower shadows, prices have no direction, and trading volume is sluggish; observe, or trade with very light positions, and take profits when available.
Remember the lessons of blood and tears: Never act blindly when the situation is unclear; act in accordance with the situation when it is favorable.
How to achieve 'win first, then fight'?
✅ The preparation phase is more important than the execution phase.
Before taking action, it is necessary to confirm:
Has the trend been confirmed? (What cycle is the current trend in? Is it nearing the end? If not at the end, we follow the trend; if at the end, wait for signals and follow the major cycle trend for orders.)
Has the structure been confirmed? (Three pushes? Channel? Confirmation of pullback?)
Have the K-line signals emerged? (Morning star? Engulfing?)
Is risk control in place? (Stop-loss? Position?)
If these are confirmed, then even if the market trends against us in the short term, we can respond calmly.
Summarized in one sentence:
🧠 Trading is not about seizing opportunities but waiting for advantages to confirm before striking.
Sun Tzu tells us:
"Victory can be known, but cannot be forced."
In trading, the true meaning of this statement is: Winning in the market is because the situation is favorable, not because I want to win. The core of not losing is controlling risk rather than fantasizing about the market providing opportunities. A true expert can recognize the situation, follow the trend, avoid battles, and capitalize on victories.
🎯 The way of trading ultimately comes down to the way of situational analysis.
Cautious battle, skillful fighting, and choosing the right moments to act are the secrets to long-term success in trading.
