There’s a trading impossibility triangle: frequency, win rate, and risk-reward ratio.
Many people trade with the desire to have opportunities every single day, a high win rate, and lots of profit from every trade. But in reality, it’s very difficult to have all three at the same time.
To improve your win rate, you need to filter signals and only take the opportunities that best meet your criteria. The stricter the filter, the fewer trades you’ll take—so high frequency and high win rate often conflict.
To improve the risk-reward ratio, you need to reduce your stop loss. A smaller stop loss does make the risk-reward ratio larger, but it also makes you more vulnerable to being stopped out by normal market fluctuations, which lowers your win rate.
So, at its core, trading is about trade-offs.
Short-term trading earns from frequency; trend trading earns from the risk-reward ratio; and swing trading seeks balance between the two.
The worst thing is wanting everything. You want to trade every day and have a very high win rate. You also want a very high win rate while making big money on every single trade.
But the market doesn’t work that way.
What you want is one thing, what you’re suited for is another, and what reality will give you is a third.
Recognize yourself, understand the market, and then make choices that fit you—this matters more than chasing perfection.#交易训练
Many people trade with the desire to have opportunities every single day, a high win rate, and lots of profit from every trade. But in reality, it’s very difficult to have all three at the same time.
To improve your win rate, you need to filter signals and only take the opportunities that best meet your criteria. The stricter the filter, the fewer trades you’ll take—so high frequency and high win rate often conflict.
To improve the risk-reward ratio, you need to reduce your stop loss. A smaller stop loss does make the risk-reward ratio larger, but it also makes you more vulnerable to being stopped out by normal market fluctuations, which lowers your win rate.
So, at its core, trading is about trade-offs.
Short-term trading earns from frequency; trend trading earns from the risk-reward ratio; and swing trading seeks balance between the two.
The worst thing is wanting everything. You want to trade every day and have a very high win rate. You also want a very high win rate while making big money on every single trade.
But the market doesn’t work that way.
What you want is one thing, what you’re suited for is another, and what reality will give you is a third.
Recognize yourself, understand the market, and then make choices that fit you—this matters more than chasing perfection.#交易训练