Post

More from @samuraipips358

Yumi🌸

@samuraipips358

Feb 6

The market hasn’t changed at all 🧵

The market changes, but the market does not change.
This is a thread that resolves this contradiction
↓ Thread 1/5

2/5
Some people say, “The market changes,” others say, “The market does not change,” and some say both, “The market changes,” and “The market does not change.”
All of these are true.

It’s similar to saying we humans change while also saying we humans do not change, both of which are correct.
Another easy example is how we can say the exact same history never reappears, yet history repeats itself, and both statements are also true.

What makes this confusing is that each statement focuses on completely different contexts.
At the level of individual phenomena, the exact same event never occurs, but if we increase the level of abstraction, we can see that the same phenomena keep repeating.

Translating this to trading, a chart identical in every way to one from the past will never appear again, but if we increase the level of abstraction, trends will come again, and ranges will come again.
It means trends and ranges repeat.
Moreover, while there may be no trendline or double bottom that is exactly the same in every detail, trendlines and double bottoms will continue to form many times in the future.

3/5
In trading, some say, “Since the exact same market never appears, you can’t use the same strategy,” but this is a mistake, as they’re overthinking the market too literally.

Even if we never see exactly the same situation when thinking strictly, by raising our level of abstraction and recognizing “patterns,” we can find similarities we can exploit as statistical biases.
This is what we traders do.

For example, if someone bases their strategy on double bottoms, it’s unrealistic to worry, “What if double bottoms never form again?”
Because a double bottom formed at a specific point or key level means the price failed to break below a previous low, and there’s a certain psychological and behavioral pattern in how other traders respond to that fact.

On a support line many traders are watching, the market tries twice to break below the low and fails.
→ Traders who were profiting from short positions see the support line holding and the low failing to break, so they want to place buy orders to take profits.
→ Traders who sold recently have their stop orders above the recent high.
→ Once it’s confirmed that the support line is holding, some traders will place new buy orders from the point where the price breaks above the recent high.
→ As a result, a double bottom is formed.

Patterns exist precisely because there is a reason they keep appearing over and over.

Why are there great traders who have been successful for decades with just one pattern?
Because universal human psychology and behavior hasn’t changed, patterns still emerge in charts, which are the traces of human trading.
Traders are those who continue to bet on that statistical edge.

Read 5 tweets

Yumi🌸

@samuraipips358

Feb 5

The Only Reason Why You Don’t Need to Fear Losing Trades🧵

If you’re afraid of losing trades, this thread is for you.
In this thread, I’ll explain why there’s no need to fear losing trades.
↓Thread 1/5

2/5
The only reason you don’t need to fear losing trades is simply because “they are an indispensable element for the success of your system (a rule-based strategy).”

If it’s necessary, there is absolutely no need to fear it.
Conversely, the reason you’re afraid is that you haven’t accepted your trading losses as “necessary” in your own trading.

As long as markets are not free from randomness, losses will inevitably occur.
Since losses are inevitable, the decision of when to realize a loss must be a decision that contributes to long-term profitability, and your losses need to provide an edge toward long-term results.

Once you truly understand how these unavoidable losses contribute to your success in the long run, you will have no reason to fear them.

3/5
What I often refer to as a “system” is not automated trading.
It’s a set of rules (including discretionary judgments) that allows you to consistently trade your strategy.
An “edge-based system” is one where if you consistently repeat those rules (decisions) through many wins and losses, you end up with a profit overall.

In other words, an edge-based system requires both wins and losses that occur by following the rules.
It’s like the game of “taking one step back and two steps forward.”
What’s important is whether the balance of risk-reward and win rate in your repeated trades contributes to accumulating profit over time.

Read 5 tweets

Yumi🌸

@samuraipips358

Feb 4

A thread for Tuesday traders to read🧵

Yesterday's wins and losses have nothing to do with today's trading.
Stop making trading even more complicated with unnecessary delusions.
↓Thread 1/6

2/6
The loss you incurred on Monday has nothing to do with today's trading.

You do not need to think about recovering it.
You just follow the rules today as you did yesterday.

Similarly, the profit you made on Monday has nothing to do with today's trading.

You do not need to think about not wanting to lose it.
You just follow the rules today as you did yesterday.

3/6
The effect of probability lies far in the future, not in the present.

There is no need to rejoice or be discouraged based on yesterday’s or today’s results.
To utilize probability, you need every win and loss that follows your rules.
And to make probability work, you need a large sample size, which takes time.

Clinging to results like winning yesterday by chance or losing today by chance, under the influence of randomness, contradicts the use of probability.

Read 6 tweets

Yumi🌸

@samuraipips358

Feb 3

“There is a way to ‘keep winning.’
But it’s not what you think 🧵

Many people misunderstand the phrase ‘keep winning.’
If you think it means ‘winning every time,’ ‘never losing,’ or ‘always increasing your capital,’ that’s an illusion.
↓Thread 1/5

2/5
Truly keeping winning means not worrying about short-term wins and losses, repeatedly trading according to the rules, and ultimately leaving a profit.

Short-term results are influenced by randomness.
There is no such thing as a method to never lose or a way to avoid consecutive losses.

If you interpret ‘keep winning’ as winning every single trade, you will end up playing a game that can never be conquered.

3/5
In this market world, which is affected by randomness, ‘keeping winning’ means that while you experience both wins and losses in individual trades, you ultimately leave a profit.

Short-term results are uncertain, but long-term results are certain.
This is exactly how the law of probability works.

For example, even in a coin toss game where there is a 50% chance of getting heads, if you only toss it five times, there is a possibility of getting tails every time.
However, if you toss it 20 times, 100 times, 300 times… or 1000 times, the result converges closer and closer to the true probability of 50%.
This is the law of large numbers, the mechanism by which probability operates, and the principle that “short-term results are uncertain, but long-term results are certain.”

Read 5 tweets

Yumi🌸

@samuraipips358

Feb 2

To traders who review their weekend performance 🧵

Immature traders look back on wins, losses, and amounts.
Then what do mature traders do?
↓ Thread 1/5

2/5
Whether your trade was good or not depends entirely on whether every trade followed the rules of the pre-prepared system with an edge (strategy).

Stop judging whether it was a good week based mainly on the number of wins/losses or profit amounts.
Short-term results are strongly influenced by randomness, so you cannot tell anything from just one week’s results, and trying to extract meaning from them is a mistake.

It is important to review your own trades, but when you do so, you inevitably do it through your own value system. If you have an incorrect perception of trading, you will fall into an endless process of unresolvable improvement.

3/5
What you should use for feedback is your rule adherence rate.

Let's visualize your strategy's rules and trading process.
For example:
- What is the situation on the daily chart?
- What is the situation on the 4-hour chart?
- What is the situation on the 1-hour chart?
- What is the distance to your stop-loss point and the distance to the next resistance line where profit can be expected?
- Did you calculate your position size?
- How much time is left until the economic indicator announcement?
… and so on.

Go through the conditions and rules you set before trading.
If every condition is met, then your rule adherence rate is 100%.
You made a 100-point trade.
The results are left to probability; they are not your responsibility.
(Of course, it is a precondition that you have tested and practiced whether the strategy has a statistical edge.)

Read 5 tweets

Yumi🌸

@samuraipips358

Feb 1

Remember this when you are tempted to break the rules 🧵

When you absolutely want to break the rules, read this thread.
↓Thread 1/5

2/5
I understand the feeling of not wanting to lose this trade.
However, it is precisely because you follow the rules and cut losses at that point that profit remains in the long run.

If you created a strategy with an edge through a large sample size in advance, then that statistic should have included cutting losses, meaning there is also an edge in cutting losses.
Please remember this.

You might sometimes end up with a profitable trade by breaking the rules and not cutting losses.
However, that experience becomes a mistaken success story, and you will believe even more strongly than before that “avoiding a loss right in front of you is more important than following the rules.”

This experience will lead you to ruin.

3/5
I understand the feeling of wanting to recoup a losing trade.
However, trying to force a trade by breaking the rules in order to recover, or attempting a special trade with an oversized position, is the same as abandoning your system.

Your strategy or system should be built on a long-term perspective.
If you prioritize your current emotions over the rules, you will never succeed.

Read 5 tweets

Share this page!

Enter URL or ID to Unroll

Yumi🌸

Try unrolling a thread yourself!

More from @samuraipips358

Yumi🌸

Yumi🌸

Yumi🌸

Yumi🌸

Yumi🌸

Yumi🌸

Did Thread Reader help you today?

Don't want to be a Premium member but still want to support us?

Send Email!