Thinking "If I had done this, I could have made a profit" or "If I had done that, I wouldn't have lost" is dangerous 🧵

Any result can happen.
If you've tested with a large sample size, believe in the law of large numbers, not the results in front of you.
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If you've tested with a large sample size, you must play a "game of probabilities" from that point forward.
This means accepting all the outcomes that occur.

Even though you've already finished testing, getting emotional about the results in front of you and thinking "I should have done this" will trigger a loss of consistency.
The results in front of you are random, and that's why you utilize the law of large numbers through a large sample size.

This result happened to turn out this way.
It's possible it could have turned out differently.
And there's no way to know that beforehand, which is why it's necessary to keep repeating the same trades under certain conditions and rules.

The market hasn’t changed at all 🧵

The market changes, but the market does not change.
This is a thread that resolves this contradiction
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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.

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.
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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.

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.
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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.

“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.
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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.

To traders who review their weekend performance 🧵

Immature traders look back on wins, losses, and amounts.
Then what do mature traders do?
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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.

Remember this when you are tempted to break the rules 🧵

When you absolutely want to break the rules, read this thread.
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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.

Don’t learn from all your losses🧵

People often say “Learn from your losses,” but in trading, losses are not necessarily a bad thing.
So what exactly should we learn from?
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There is a saying, “Learn from your failures,” but many people misinterpret this as “Learn from your losses.”
This mistranslation arises because they perceive losses as failures, yet what we should really learn from is “failure.”

So what does failure mean in trading?

Here's how to think when you're struggling with trading 🧵

Your thoughts and beliefs are behind those emotions.
It takes time to develop the right beliefs for trading, but here are some ways of thinking that can act as first aid or medicine when you're struggling.
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🙋‍♀️Afraid of losing and hesitant to enter.
👉Think, "I'm going to lose properly according to the rules."

Your job is to accurately generate all wins and losses according to the rules.
The edge of the system emerges by repeating these over the long term.

Winning in the trade right in front of you is not your job.
Your job is to faithfully follow the instructions of the system and carefully collect "all" the wins and losses generated from those rules.

Your edge lies within you🧵

You can’t draw out your edge because you always quit when you’re losing.
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No matter how much edge a strategy or rules may have, if you yourself aren’t consistent, that edge won’t appear.

Because the edge doesn’t emerge in the immediate trading results but rather through a large sample size, you need to keep being consistent to build that large sample size, regardless of the immediate results.

However, many traders can easily follow the rules when they’re winning, but as soon as they start losing, they begin to doubt their strategy or the market and stop being consistent.
In other words, they always quit at a disadvantageous time.
After all, nobody stops using a strategy when their capital is increasing.

Position sizing is at the core of edge 🧵

A strategy works because there is an edge in the cost itself.
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Position sizing should not be determined by emotions, but rather by the performance of strategies and systems, determining a size that can safely collect a large sample size over the long term.
If you trade with consistent rules on a large sample size beforehand, you should be able to understand your win rate and potential consecutive losses.

Whether your system is profitable with a 55% win rate at a 1:1 risk-reward ratio, or with a 40% win rate at a 1:2 ratio, there are various scenarios, but I believe each system has a balance that produces a positive expected value.

To use probability laws to extract edge, you need a large sample size, and during this process, position sizing that allows you to safely continue long-term while realizing positive expected value is crucial.

Backtesting Procedure🧵

I will explain how I conduct backtesting.
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Backtesting is an extremely important place to confirm whether your strategy or system has a statistical edge and to cultivate consistency.
Today, for those of you who don’t even have a system with an edge yet, I will explain how to perform backtesting.
This is just my approach, and there are various ways to backtest, so I hope you find it helpful as one idea.

First, the foundation of any strategy is understanding the market.
Your strategy must be linked to the fundamental principles of the market.
As you study the market, each time you have a question or form a hypothesis, you use backtesting software to verify it.

You will check what actually happens when you try out the things you’ve learned from books and other sources.

To keep winning, give up on winning 🧵

If you want to become a true winner in trading, you must stop focusing on the wins in front of you.
It may sound paradoxical, but chasing individual trade victories is the biggest obstacle to long-term success.
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The world of trading is full of uncertainty.
Short-term results are completely random; you can lose with the most perfect entry and win with the most haphazard entry.

True winners choose to put the laws of probability on their side rather than fight against these random outcomes.
Focusing on individual results means fighting against these random outcomes.
This inevitably leads to emotional decisions, lack of consistency, and eventual failure.

Why do great traders change their opinions so quickly? 🧵

Beginner traders cling to their own “predictions.”
Good traders execute according to their plan.
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A prediction and a plan are completely different things.
Beginner traders predict, “It should go up next,” and even when there are signs it won’t, they stick to that prediction indefinitely.

Great traders bet on a statistical edge, so even if they enter at a point where “It’s highly likely to go up next,” they don’t necessarily believe it will.
If that’s not the case, they also have a scenario in which they know at which point to cut losses in order to preserve their statistical edge.
And if profits grow, they decide in advance how to use a trailing stop in line with a potential scenario that maintains their statistical edge.

To a beginner’s eyes, it might look like they freely change their opinions with ease.

To troubled traders this weekend🧵

Please read this thread multiple times over the weekend and reaffirm your work as a trader.
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Trading is not done to achieve immediate wins.

Even if you enter a trade perfectly, you can still lose, and even if you enter arbitrarily, you can still win.
Short-term results are random.

Your job as a trader is to leverage probability in this uncertain world and extract an edge.
Immediate wins and losses do not matter.

Why do you always look for a "reason" every time you lose? 🧵

You search for reasons after every loss because you still don’t truly understand trading.
In fact, the very act of searching for reasons is what’s destroying your trading.
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Short-term results are entirely random.
Even a perfect entry can lead to a loss, and even the most careless entry can result in a win.
Looking for reasons behind these random outcomes is not only a pointless effort but also harmful.

The reason you engage in live trading should be this: "Because repeating consistent actions over the long term will work in your favor."
This is the essence of leveraging probabilities.

For those who want to multiply their funds by 10x in one month🧵

A thread to understand the reality of successful trading and the necessary preparations.
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Those who dream of multiplying their funds by 10x in a month through trading don't understand what trading is.
Trading is not gambling or lottery for a big reversal of fortune.

As I've written here many times, to succeed in this market world that is strongly influenced by randomness, you need to utilize the laws of probability.

Simply put, a trader's job can be summarized in these three points:
・Prepare a coin that tends to show heads
・Keep calling "heads" consistently
・Play with stakes that allow continuous participation in the game

This is what it means to utilize probability.
When you play this "probability game," you'll understand how unrealistic it is to multiply your funds by 10x in one month.

The path you will take to success 🧵

"Starting to trade" → "Hope due to ignorance" → "Despair due to knowledge" → "Hope due to knowledge" → "Success"
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In your long trading journey, you start trading full of hope, get knocked down, always feel "I finally get it this time!", get knocked down again, feel "I finally get it this time!" again, get knocked down again, repeating this forever, and eventually feel despair, thinking, "I can't win no matter what I do."
There is no end to improvements based on short-term random results, and while it always makes you feel like you understand something, the next thing that happens easily denies it and throws you into a loop of despair.

At some point, you realize that trying to get immediate results is fighting against randomness and will never end.
Your focus shifts to making profits in the long term, and when you start thinking about that, the importance of probabilistic thinking starts to resonate with you.

Remove your worries🧵

Watching your P/L throughout the trade and worrying about the results is meaningless and only carries risks.
Worrying is not included in your trading process.
Once you have done what you need to do, your job is finished.
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There is no need to think about how much you are currently winning or losing during a trade.
I believe many people get excited when they see unrealized profits or become frightened when they see unrealized losses, but you should stop this habit immediately.

This behavior stems from a short-term perspective, rooted in the false belief that if you win the trade in front of you, you get closer to success, and if you lose, you move further away from it.
Even though you must act according to the rules, it easily leads to emotional decisions about what to do with your current unrealized profit, making it difficult to maintain consistency.
This “belief in placing value on wins and losses” is the root cause of the short-term perspective and the cause of this behavior.
And ultimately, it is the root cause that makes success in trading difficult.

The ultra-important things only true traders know🧵

I have briefly summarized the understanding necessary for your success.
All traders must thoroughly imprint this into their minds.
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Trading is not done to gain immediate wins.
Even if you enter perfectly, you will still lose, and even if you enter arbitrarily, you will win sometimes.
Short-term results are random.

Your job as a trader is to extract an edge using probability from this world of uncertainty.
The immediate wins and losses in front of you are irrelevant.

To ensure you truly master probabilistic thinking 🧵

Probabilistic thinking isn’t something you can master just by knowing about it.
Here’s what’s strongly preventing you from adopting it without you even realizing it.
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Merely understanding probabilistic thinking intellectually won’t help you master it.
You need to understand it through experience by practicing.
At the same time, you must stop all the habits you’ve already developed that strongly contradict probabilistic thinking.

Here are the habits you need to stop:

- Looking at charts for no reason.
- Checking your current capital and thinking about how much it has decreased from the recent high.
- Calculating how many wins it will take to recover your last loss.
- Worrying about the P/L while trading.
- Entering a trade because you believed it was the right move, but then looking at the result and thinking, “I shouldn’t have done that.”
- Counting consecutive losses.
- Getting excited or jealous about other people’s wins, which makes you overly focused on your own trades.
- Boasting about your wins on social media.
- Making excuses for your losses.
And so on.