Let's overcome the human tendencies that obstruct the use of probability 🧵

What are the internal problems faced by traders attempting to utilize probability?
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Our job as traders is to prepare the rules for a strategy that has an edge, and then consistently continue to adhere to those rules.

Simply put,
It means preparing a coin biased towards landing on heads, and only when that specific coin is tossed, continuing to call "heads" no matter what.

In other words, once you have prepared the coin biased towards heads, most of your work is already finished.
There are only two key points to watch out for: only "when that specific coin is tossed," and "always call heads."

Despite that, this is incredibly difficult.
This difficulty may be hard to comprehend unless you are a trader.

Stop endlessly learning from losses 🧵

The "game of probability" involves an attitude of accepting randomness, adopted by "those who have already completed their learning", in order to bring reproducibility to that learning.
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When I say, "Stop learning from losses," I invariably encounter the pushback, "Learning from losses is important."

This happens because you still perceive "loss = failure" and are trading for the sake of immediate wins and losses.

Traders employing probabilistic thinking do not trade for the sake of immediate wins and losses; rather, they act with consistency precisely because they know that profits will eventually outweigh losses in the aggregate sum of wins and losses that naturally arise from continuously repeating actions according to their rules.
In other words, it is precisely because they have "already determined the answer regarding those wins and losses" and fully accept them all that it becomes possible to consistently adhere to the rules.

Traders applying probabilistic thinking do not judge the quality of their trading based on immediate trade results; they always think in terms of a large sample size.
To them, a loss is not a failure; true failure means deviating from the rules and losing consistency.

In this sense, what truly needs to be learned from are the times you lack consistency yourself, or instances where inadequate preparation leads to a lack of confidence in your rules.

Do not confuse extracting an edge with refining a strategy 🧵

Many people lose consistency before extracting the edge.
Be clear whether you want to extract the edge or improve the strategy.
You cannot do both at the same time.
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To extract the edge from a system (strategy) with an edge, it is necessary to make the law of large numbers work, and it is necessary to consistently continue performing the same trades.

However, many traders stumble here.
When they fall into losing streaks or drawdowns, they think, "Has the system stopped functioning?" or "Has the market changed?", fall into anxiety, and start improving the system or abandon the system itself.

The trader themselves cannot maintain consistency before the law of large numbers begins to work, and the necessary sample size never accumulates.

How to maintain motivation until results appear? 🧵

Probability requires a large sample size to work.
Do not rely on motivation.
People who rely on feelings will definitely waver.
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A large sample size is necessary for probability to work, and consistent action is required of us traders.

I am often asked, "How can I maintain motivation until results appear?".
You must not rely on motivation.
It is important to "systematize" your actions.

If you rely on motivation or emotions, you will definitely waver.
The consistency required of you cannot be achieved if you use your emotions as energy.
You must continue to perform your daily habits as a matter of course, without the intervention of willpower.

50% Win Rate & Losing Streak Anxiety? 🧵

If losing streaks make you think "Is the system broken?", you "still don't understand" probability.
This thread explains the real meaning of a "50% win rate".
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Let's assume your strategy's win rate is 50%.
A 50% win rate does not mean "you can win 1 out of every 2 times".
It means "as a result of repeating it hundreds or thousands of times over the long term, the overall win rate converges to about 50%".

However, many people end up thinking:
- Lost 2 times in a row.
- Lost 5 times in a row.
- Therefore, this system is strange.

This is a confusion between short-term results and long-term statistics.
What is necessary in trading is the perspective of understanding "how many repetitions are needed for probability to function".

Many people misunderstand this point, calculating based on the results of a small sample size even when their win rate isn't 50% in the first place, thinking things like, "I won 5 out of 10 times, so the win rate is 50%".
Also, even when they actually know the win rate from a large sample size, they look at the results from a small sample size and think, "I only won 2 out of 10 times, so the win rate is 20%. Something is wrong."

3 Keys for Probabilistic Traders 🧵

No matter how much you claim "I think in terms of probability," if you are not presupposing these 3 things, you do not understand probability, and you do not have the stance of "utilizing" it.
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"You will have losing streaks no matter how excellent the strategy you use"

Do not try to search for a system that does not experience losing streaks or drawdowns.
Such a thing does not exist.
What is being tested during a losing streak is not the system, but "your own" discipline and consistency.

If you cannot overcome this problem, no matter what wonderfully performing system you have, you will keep tinkering with or abandoning the system every time you encounter an unavoidable losing streak, and you will never be able to extract the edge.

A system with an edge is one where profits remain through all the wins and losses that occur according to the rules, and losing streaks are also included as part of the system.

Trying to avoid losing streaks is the same as denying the system itself.

Make good use of your trading journal 🧵

Improvement to gain consistency begins with looking at yourself.
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I have introduced this before, but I recommend writing the trading journal for consistency improvement or your process improvement "before the trade".

The reason is simple.
I think most people write their trading journal after the trade, but this increases the risk of creating a large volume of records with outcome bias.
Based on a single outcome, you might think about "why you lost," or assume from the start that your judgment was poor regarding the losing trade result.

What is important is not the outcome but the process.
Improving the process is not about looking at things after everything is over, but about observing yourself just before taking action.

Look only at your rule adherence rate, not the monetary amount 🧵

"How much did I make this month?"
It's understandable to be concerned about this, but the monetary amount doesn't represent whether you made a "good trade".
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When reviewing your trades each month, focus only on the rule adherence rate, not the monetary amount.

No matter how much edge a system (strategy) has, short-term results are strongly influenced by randomness.
Utilizing probability is extremely important in trading.

Probability manifests through the Law of Large Numbers.
A system with an edge is something that leaves a profit in the long run if you keep following its rules and generating wins and losses.

In other words, even if you follow the rules of a system with an edge, winning or losing is not guaranteed on any individual trade, but by remaining consistent, the Law of Large Numbers will work to bring you profit.
What's important here is not winning or losing the trade in front of you, but whether you are able to keep following the rules.

When you give meaning to one, meaning attaches to the other too🧵

Rejoicing when you win means sadness when you lose.
Crucially, don't see wins as "good" or losses as "bad".
Both are just single data points in your sample size.
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"Trying not to feel bad even when you lose" essentially means the same thing as "Do not rejoice even when you win".

As long as you rejoice when you win, you will inevitably be sad when you lose.
These are two sides of the same coin, and as long as you think in terms of this coin, it is unavoidable.

What is important is how well you can shift what you consider worthy of joy from "winning or losing" to "whether you followed your rules".

And for that, you need to perfectly understand "logically" that "continuously following the rules leads to success".
How much you can believe this without any doubt is crucial; conversely, it reflects how well you understand it "logically".
Mere blind faith is not enough.

Because without a positive expected value, continuously following the rules will lead to bankruptcy.

Stop looking at others' boastful winning trades 🧵

You might be looking at someone's winning trades thinking "it might serve as a reference," but doing so is hindering your success.
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As long as you think of trading as a "win/loss game," you cannot succeed.

This world is full of randomness, and no matter what trading method you use, you can win any single trade right in front of you.
What's important is whether profits exceed losses when you continue repeating that trade.
This is not a "win/loss game" but a "probability game".

However, social media is overflowing with players of the "win/loss game," and many people boast about their winning trades right in front of them.
Some don't even show the trade itself, just the amount of the winning trade, which makes no sense.
What element is there to serve as a reference.

If you view these thinking they "serve as a reference," not only do you not understand what is truly important, but every time you look at them, you constantly pour energy into the mistaken belief that "wins and losses are what's important".
In your own trading too, the tendency to seek wins and avoid losses becomes stronger, and that tendency changes success into impossibility.

It's not your emotions that are at fault; your understanding and preparation are the entire cause🧵

Many traders blame the market, the system, and their emotions too much for their failures.
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"I got greedy and traded with a large position size"
"I couldn't cut my losses because of fear"
"I made a revenge trade out of anger"

Many people say it is all because of emotions.
That's not true.

They are due to your lack of understanding and preparation.
Emotions are not the cause; they are merely the result.

Anyone feeling down about "no trades again today," please read this 🧵

You might already be halfway to being a pro.
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Are you feeling down, thinking "I couldn't trade again today..."?

But if you didn't trade today because you followed your rules, you did the right thing, and you made money.
That money is invisible to the eye, but you earned it in the form of "expectancy."

The same is true for losing trades.
If you lost while following your rules, you earned "expectancy."

Expectancy is the average you can make per trade, and if your system has an edge—positive expectancy—then every "losing trade" and every decision to "not trade" that arises from those rules carries expectancy.

Strictly speaking, the precise figure for expectancy is derived from the numbers of winning and losing trades, but the "trades you skipped by following the rules" that filter those outcomes are also essential pieces that generate positive expectancy.
That is why "waiting is part of the job."

Four Fatal Habits Guaranteed to Fail 🧵

Are you guilty of any of these?
If even one applies to you, stop immediately.
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💣Moving (widening) your stop-loss

Cut your losses exactly as planned, exactly as your rules specify.
The moment you let your emotions or opinions take priority, you deviate from the plan and the rules, and you lose consistency.

Once consistency is lost, you stop collecting trade samples under identical conditions, probability stops working, and your system's edge cannot emerge.
The immediate win or loss is not important.

Nothing starts without consistency🧵

Even if you keep playing the "win‑loss game" without consistency for years, you will just keep circling in front of the starting line for years.
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In trading, short‑term results are strongly influenced by randomness, and the immediate wins and losses in front of you do not determine whether that trade was correct.

In this world of uncertainty, the only way to look for "certainty" is to put the law of large numbers to work through a large sample size and exploit probability.

Even if single wins and losses right in front of you keep tossing you around and make you feel "I finally got it!" again and again, you are merely being swayed by randomness and, although you seem to be moving forward, you are not moving at all.

Without consistency, you cannot even know whether the strategy has positive expectancy in the first place, nor can you know what truly needs to be improved.

Losing streak tolerance is neither your ability to control emotions nor mental toughness.🧵

The reason you cannot accept that losing streak is your lack of understanding and preparation for trading.
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An inexperienced trader cannot accept even a mere "three‑loss streak" and, thinking something is wrong, changes the rules, abandons the strategy, and breaks consistency.

You might think it is an emotional problem, but that is wrong, because the root of this issue is "lack of understanding" and "lack of preparation."
It is only mistaken perceptions and misunderstandings that give rise to feelings such as aversion inside you.

The reason you cannot accept a losing streak is that you feel it is an "abnormal situation."
Yet with correct understanding based on probabilistic thinking you will see it is "completely within expectations."
In fact, there is no system that does not include losing streaks or drawdowns.
Only when they are included does a system with an edge function.

The problem is not that you cannot emotionally accept the losing streak, but that your lack of understanding means you had not built that streak into your expectations in advance.
That lack of understanding creates "a self that cannot fully trust the system" and "a self that cannot act with consistency."

"You will inevitably lose"—make that your premise🧵

If you do not want to lose capital, you must not trade.
That is like saying you want to swim but not get wet.
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It is impossible to avoid all losses in trading, so do not aim for a 100% win rate.

Trading cannot exist without the premise of "accepting losses and incorporating them into the plan."
Profit comes as "the result of continually accepting controlled losses."

By repeatedly entering and exiting strictly according to the rules, letting short‑term randomness generate wins and losses, when that grows into a large sample size, the system that still leaves profit is a system with an edge.

What is required of you is to keep following the rules.

You can never win by fighting your emotions🧵

Emotions in trading are the manifestation of your beliefs and thought processes, and because that emotion "always feels right" to you, you cannot resist it.
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Emotions in trading are not primary fears like those triggered by lightning, loud noises, or darkness; they are secondary emotions accompanied by your own understanding and cognition.

A baby neither smiles nor cries when looking at a chart because no meaning has been attached to it.
Your trading emotions reflect whatever meaning you have found there, and the corresponding emotion appears, so the emotion always feels correct to you, and you cannot stop the actions driven by that emotion.

In that moment you act because you truly believe it is necessary.
There is a reason you feel afraid when you feel afraid, and that reason is truth for you.

For example, if you panic and break your rules because you think you "need to take profits right now", or you break your rules because you think you "must jump on this trend right now" and end up buying at the top, then no matter how much you say "rules are important", deep down you believe that "the win or loss in front of you is more important than the rules", and the matching emotion appears, and at that moment you think it is "right", so you cannot resist.

The advice "Reduce your position size to suppress your emotions" is wrong🧵

Position size is a critical part of strategy.
It is not something to be determined based on emotions.
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"If you are scared, reduce your position size" is often said, but this view is wrong.
I want to put an end to this wrong copy-and-paste advice that keeps being posted.

Why is this view wrong?
The reasons are simple.
・Determining position size "based on emotions".
・Remaining stuck in the viewpoint that "losing is bad".
・Position size is an extremely important aspect of strategy, yet it is being neglected.

You must change the premise that losing is bad.
Do not console yourself "afterwards" that a loss is a cost; make it function as a true cost that was "calculated beforehand".

And it is precisely because "you understand it truly functions as a cost, are convinced of it, and are utilizing that cost" that emotions which deny it cease to appear.

The logical sequence is important.
It is not that you change position size to suppress emotions; rather, your associated emotions change precisely because you mathematically understand the necessary position size.

Wrong: Emotions → Change in Position Size
Correct: Calculate cost per trade based on strategy performance → Calculate position size that allows safely collecting samples long-term with 0% risk of ruin → Emotions that match that

When the system ends, it is when your consistency ends🧵

The cause of a system ceasing to function is not in the market.
It is not that the system ceases to function; rather, "you" cease to function as a part of the system.
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When a strategy or system stops working, it is not that the system has reached its limit.
Only your mind has reached its limit.

Many traders cannot maintain consistency for even thirty trades, nor can they continue consistent trading for even a single year.

Yet they judge that "the system has stopped working".
What has reached the limit is not the system but always your own mental limit.

People who go bankrupt with a 90% win rate strategy🧵

Immature traders go bankrupt even with a 90% win rate, while superior traders make a profit even with a 45% win rate.
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In trading to make a profit, the win rate is not a significant issue.
However, many traders seek a high win rate, thinking that a "high win rate strategy = good strategy".

At the root of this is the mindset that "winning is good" and "losing is bad", and because they perceive losing as failure and try to avoid it extremely, they seek high win rate strategies.

However, as long as such a mindset exists at the root, you will not succeed, no matter how high the win rate is.
No matter how much you seek a high win rate, a 100% win rate is impossible, so at some point, you will need to lose.

The actions of trying to avoid losses and seek wins create strain in trading, and that energy will lead to your own ruin.

A strategy that avoids losing streaks does not exist🧵

What we absolutely must do is define and recognize what a losing streak is.
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I am always talking about losses and losing streaks, and the reason for that is because the perception of losses is extremely important for a trader.

When you are winning, it is easy for anyone to keep following the rules.
Talking about easy things is not very meaningful.

A trader is tested when they are losing, when they are on a losing streak, and at this time, various things are tested, such as your qualities as a trader, prior preparation, trust in the system, understanding of probability, the sample size you are focusing on, whether you have a long-term perspective... etc.

In other words, unless you are truly mature as a "trader," you cannot maintain consistency.
The very time that consistency is tested is "when you are losing," "when you are on a losing streak."