The one posted yesterday really has a lot of things that newbies can’t figure out... let me put it in a more intuitive way...
For example, if the win rate is 95%, and every order has a stop loss, does that mean it must be profitable?
Not necessarily. Really, not necessarily... If you see someone always emphasizing their win rate but never talking about the risk-reward ratio, you can basically avoid them...
Using the simplest calculation: each order is 100u at 100x leverage, and the take-profit is assumed to be 0.5-0.7%, then the profit from each take-profit is 50-70u. After subtracting about 12u in fees (varies by exchange; here we use the standard 0.06%), 50u becomes 38, and 70u becomes 58.
Now let’s look at the stop loss.
The position is 100, and when price moves about 0.5% against you, you add another 100. Then when it moves another 0.5% against you, you add another 100. The exact gap doesn’t matter; what matters is that the final average entry price is pulled down by about 4% as the stop loss, which is the so-called “wide stop.” In this case, the estimated minimum loss on one trade is 4% of 30,000, plus fees, for a total loss of about 1236.
How many 38s and 58s do you need to make up that 1236? At 0.5%, you need 32.52 trades; at 0.7%, you need 21.31 trades. During this period, if no loss occurs, the best outcome is breaking even at best—you’re steadily feeding fees to the exchange. If you’re a little unlucky, it’s a net loss.
Now do you understand why a strategy can have 100 trades in a month, with 98 wins and 2 losses, yet end up making almost no profit or even losing money?
What the trading world never lacks are strategies that make money for a thousand days and get wiped out in one day. But because you keep earning during those thousand days, many people forget or ignore the pain of that one day of being wiped out.
What’s even worse is that after being burned a few times by that “one day,” there’s no turning back. You completely don’t know how to trade yourself anymore, and can only pin your hopes on other paid communities that promote even more outrageous claims. What’s more interesting is that because so much principal has been lost, your requirements become absurd too—for example, demanding 100%+ monthly returns, or doubling your money in a few days, and so on.
Any reasonably normal person would never agree to such a request; the only ones who would are scammers...
So if it’s a scam, how could there be any good outcome?
For example, if the win rate is 95%, and every order has a stop loss, does that mean it must be profitable?
Not necessarily. Really, not necessarily... If you see someone always emphasizing their win rate but never talking about the risk-reward ratio, you can basically avoid them...
Using the simplest calculation: each order is 100u at 100x leverage, and the take-profit is assumed to be 0.5-0.7%, then the profit from each take-profit is 50-70u. After subtracting about 12u in fees (varies by exchange; here we use the standard 0.06%), 50u becomes 38, and 70u becomes 58.
Now let’s look at the stop loss.
The position is 100, and when price moves about 0.5% against you, you add another 100. Then when it moves another 0.5% against you, you add another 100. The exact gap doesn’t matter; what matters is that the final average entry price is pulled down by about 4% as the stop loss, which is the so-called “wide stop.” In this case, the estimated minimum loss on one trade is 4% of 30,000, plus fees, for a total loss of about 1236.
How many 38s and 58s do you need to make up that 1236? At 0.5%, you need 32.52 trades; at 0.7%, you need 21.31 trades. During this period, if no loss occurs, the best outcome is breaking even at best—you’re steadily feeding fees to the exchange. If you’re a little unlucky, it’s a net loss.
Now do you understand why a strategy can have 100 trades in a month, with 98 wins and 2 losses, yet end up making almost no profit or even losing money?
What the trading world never lacks are strategies that make money for a thousand days and get wiped out in one day. But because you keep earning during those thousand days, many people forget or ignore the pain of that one day of being wiped out.
What’s even worse is that after being burned a few times by that “one day,” there’s no turning back. You completely don’t know how to trade yourself anymore, and can only pin your hopes on other paid communities that promote even more outrageous claims. What’s more interesting is that because so much principal has been lost, your requirements become absurd too—for example, demanding 100%+ monthly returns, or doubling your money in a few days, and so on.
Any reasonably normal person would never agree to such a request; the only ones who would are scammers...
So if it’s a scam, how could there be any good outcome?
