1. The growth of a 'trend trader' has two critical turning points. If you can cross them, your account can grow continuously. If you can't, you'll be stuck. The first critical turning point is minimizing losses. By managing your position and using a risk-defined approach, you control each loss to no more than 2%, preventing large losses and stabilizing your drawdown on the loss side; this is a necessary condition for surviving in this market. The second critical turning point is achieving large profits. By letting your profits run, you can gain excess returns on the profit side, allowing your capital curve to achieve explosive growth while maintaining stable drawdowns, thus stepping up to a new level.
2. Small losses and large profits, cut losses and let profits run, I believe many friends who want to trade trends deeply recognize this, but many find it difficult to achieve. This includes not only the psychological fear of giving back profits but also the uncertainty about which type of movement should be held for the long term and where to end that long hold; there isn't a clear standard. If there is a clear standard and it is executed consistently over the long term, then your account's profits will reflect small losses and large gains, which will naturally instill confidence. Therefore, the key issue is not only about psychological conditioning but also about the rules and standards for maintaining profits.
3. The rules and standards for maintaining profits are not to say that all trend structures are the same; there are differences. In other words, different trend structures will have different rules and standards for maintaining profits, and not all trend structures are suitable for holding for the long term. Some trend structures are inherently suitable only for short-term trading. It is crucial for us to understand which trend structures are suitable for long holding and which are suitable for short-term trading. If something is suitable for long holding but you treat it as a short-term trade, or if something is suitable for short-term trading but you treat it as a long hold, that is undesirable.
4. What kind of trend structure is suitable for short-term trading? It is one that, while structurally meeting the definition of the Dow trend structure, has significant back-and-forth fluctuations and a relatively flat main trend line. In such a trend, if you hold it long, you will almost give back half of your profits; although you still end up with profits, the time loss is too high.