Today I want to talk about a few things I particularly regret—if someone had told me these trading tips when I first entered the market, I could have lost at least 100,000 less and avoided two years of detours. These tips, whether you are a beginner or have just recently entered, can help you avoid most fatal pitfalls and head directly towards stable profits as long as you understand them in advance.
Without further ado, let's get straight to the useful content.
1. Advice 1:
The core of trading is 'having an advantage', without an advantage you are just a gambler.
Many newcomers enter the market, starting to trade with strategies found randomly online, making money by luck and blaming the market when they lose—actually, the core issue is: your strategy lacks a 'profit advantage'.
What exactly is 'edge'? Simply put, it is a rule or system that you can repeat and that can make money in the long run, fundamentally a 'positive mathematical expectation'. You can calculate it using a formula:
Edge = win rate × average profit - loss probability × average loss.
Let’s illustrate with a practical example to help you understand:
Your strategy has a win rate of 70% (7 out of 10 trades winning), averaging 80 per trade;
Loss probability of 30% (3 out of 10 trades losing), averaging a loss of 100 per trade;
Substituting into the formula: 70%×80 - 30%×100 = 56 - 30 = 26.
This means that in the long run, each trade can earn a stable 26; for 100 trades that amounts to 2600—this is a strategy with an edge. Conversely, if the result is negative, it won’t help to execute diligently; it’s purely a waste of time.
Here, I need to correct a misunderstanding: win rate and risk-reward ratio are equally important; emphasizing one over the other is useless.
For example, a win rate of 90%, but earning 1 per trade and losing 100— even if winning 9 out of 10 trades, a single loss will wipe out all profits, and you will lose in the long run;
For example, a risk-reward ratio of 3:1, but a win rate of only 10%—10 trades winning 1 and losing 9 still results in a loss.
Therefore, the core of finding a strategy is not to seek a 'high win rate' or a 'high risk-reward ratio', but to find a system that has a 'positive edge by combining both'. This is the essence of making money in trading.
2. Advice 2:
Risk management is a lifeline; without risk management, no matter how good the strategy is, it is useless.
I have seen too many people who, armed with a profitable strategy, end up losing all their capital— the problem lies entirely in risk management. The core of risk management is 'protecting your capital so that you can survive until the strategy can leverage its advantages.'
Let’s illustrate with a real comparison case: two traders A and B:
Both start with 10,000;
The strategies are the same: win rate of 50%, risk-reward ratio of 3:1;
The only difference lies in risk management:
Trader A: risk of 5,000 per trade (50% of capital), can earn 15,000 if successful, loses 5,000 if not;
Trader B: risk of 100 per trade (1% of capital), can earn 300 if successful, loses 100 if not.
Results of 10 trades: the first two trades lost all.
Trader A: lost all 10,000 capital in two trades, exited directly, losing any future opportunities to profit;
Trader B: lost 500 in the first 5 trades, gained 1500 in the last 5 trades, ending up with a net profit of 1000, increasing capital by 10%.
This is the meaning of risk management: even if the strategy has continuous losses, as long as the risk is controllable, you can endure until profitable trades come to offset the losses. Conversely, if the risk exposure is too large, a single black swan event or several consecutive losses can lead to completely leaving the market.
Remember: the primary goal of trading is not 'how much money to make', but 'how long to survive'—surviving gives you the opportunity to make money.
3. Advice 3:
Three essential elements for profitability: edge, risk management, and discipline, none of which can be omitted.
Many people think that 'trading mindset determines everything', but I want to tell you: mindset is just the result, not the cause. What really determines whether you can be profitable are three key elements: edge (a strategy that makes money), risk management (rules for survival), and discipline (ability to execute). All three are interdependent; one cannot be missing.
Why is mindset not the only factor? Consider this example: if you go to the casino with the best mindset, you will still lose in the long run—because you have no advantage over the casino. Trading is the same:
Having an edge + risk management, but lacking discipline: the strategy says 'do not enter', but you cannot resist the impulse to place an order; when the stop-loss level is reached, you hesitate to cut losses, and in the end, the strategy becomes distorted, losing all capital;
Having risk management + discipline, but lacking an edge: no matter how strictly you execute or control risk, in the long run, you still cannot make money, just lose more slowly;
Having an edge + discipline, but lacking risk management: just like trader A mentioned earlier, a single mistake can lead to total loss.
For me, mindset only accounts for 20% in trading—when you have an advantage strategy validated by backtesting, combined with clear risk management rules, discipline and a good mindset will naturally form. It’s like the 'coin toss game':
Rules: earn 100 for heads, lose 50 for tails, guaranteed to profit in the long run;
Even if you toss tails three times in a row, you won’t panic—because you know the probabilities and risk-reward ratio are in your favor, and as long as the sample size is large enough, you will definitely earn it back.
Trading is the same: the reason you panic or frequently change strategies is fundamentally due to a lack of confidence in your strategy (not validated by a large sample backtest). When you confirm the advantage of your strategy through backtesting, and combine it with risk management, you won’t panic during consecutive losses, and discipline will also become easier.
4. Advice 4: Don’t look for the 'best strategy'.
There is no universal strategy, only strategies that adapt to the market.
The most common mistake beginners make is to frantically search for the 'highest win rate, the best trading strategy', thinking that finding it will solve everything— but the truth is: no single strategy can adapt to all markets.
Each strategy has its own 'comfort zone':
Trend-following strategy: making money in trending markets (upward/downward) is as easy as drinking water, but in sideways, choppy markets with many false breakouts, it only results in continuous losses;
Range-bound strategy: performs brilliantly in sideways markets, but when faced with strong trends, it will incur repeated losses.
The market is constantly changing: today it’s trending, tomorrow it may be sideways, and the day after it changes to choppy. If you obsess over finding the 'best strategy', you will only face repeated failures when the market switches, and ultimately your mindset will collapse, leading to constant strategy changes and a vicious cycle.
The correct approach is: prepare 2-3 different types of strategies to cope with different markets. For example:
Use trend-following strategies in trending markets;
Use range-bound strategies in sideways markets;
Use breakout strategies in breakout markets.
This way, regardless of how the market changes, you have the corresponding tools, significantly enhancing overall win rate and profit stability.
The last core reminder:
Trading is not about 'getting rich overnight', but about 'long-term compounding'.
Many people enter the market hoping to 'double their money in a month' or 'achieve financial freedom in a year', thus taking big risks and placing heavy bets— but I have seen all stable and profitable traders, none of them became successful by 'quick doubling'.
Even top traders will have losing months and cannot achieve profits every month. The essence of trading is 'long-term compounding': extending the time frame, earning stable returns with small risks, letting profits roll over, and ultimately achieving exponential growth.
For example: earning a stable 5% monthly, capital can increase by 79% over a year; earning a stable 10% monthly, capital can increase by 314% over a year—this seems slow, but it’s steady and sustainable. Conversely, pursuing quick doubling, encountering consecutive losses leads to total liquidation with no chance to recover.
In summary: in the early stages of trading, losing less is gaining.
The core message of the above 4 pieces of advice is 4 sentences:
First, find a strategy with a positive edge; do not trade blindly;
Put risk management first; do not let single trade risk exceed 1%-2% of capital;
Edge, risk management, and discipline are all essential; mindset is a natural result;
Do not seek a universal strategy; use multiple strategies to adapt to different markets; long-term compounding is the way to go. Today, I want to share several things I particularly regret—if someone had told me these trading advices when I first entered the market, I could have lost at least 100,000 and saved two years of detours. These pieces of advice can help you avoid most fatal pitfalls, guiding you toward stable profitability.
Without further ado, let’s get straight to the point.
1. Advice 1:
The essence of trading is 'having an edge'; without an edge, you are just a gambler.
Many beginners enter the market, starting to trade with strategies randomly found online, making profits by luck and blaming the market for losses—the core issue is: your strategy lacks a 'profit edge'.
What exactly is 'edge'? Simply put, it is a rule or system that you can repeat and that can make money in the long run, fundamentally a 'positive mathematical expectation'. You can calculate it using a formula:
Edge = win rate × average profit - loss probability × average loss.
Let’s illustrate with a practical example to help you understand:
Your strategy has a win rate of 70% (7 out of 10 trades winning), averaging 80 per trade;
Loss probability of 30% (3 out of 10 trades losing), averaging a loss of 100 per trade;
Substituting into the formula: 70%×80 - 30%×100 = 56 - 30 = 26.
This means that in the long run, each trade can earn a stable 26; for 100 trades that amounts to 2600—this is a strategy with an edge. Conversely, if the result is negative, it won’t help to execute diligently; it’s purely a waste of time.
Here, I need to correct a misunderstanding: win rate and risk-reward ratio are equally important; emphasizing one over the other is useless.
For example, a win rate of 90%, but earning 1 per trade and losing 100— even if winning 9 out of 10 trades, a single loss will wipe out all profits, and you will lose in the long run.
For example, a risk-reward ratio of 3:1, but a win rate of only 10%—10 trades winning 1 and losing 9, still results in a loss.
Therefore, the core of finding a strategy is not to seek a 'high win rate' or a 'high risk-reward ratio', but to find a system that has a 'positive edge by combining both'. This is the essence of making money in trading.
2. Advice 2:
Risk management is a lifeline; without risk management, no matter how good the strategy is, it is useless.
I have seen too many people who, armed with a profitable strategy, end up losing all their capital— the problem lies entirely in risk management. The core of risk management is 'protecting your capital so that you can survive until the strategy can leverage its advantages.'
Let’s illustrate with a real comparison case: two traders A and B:
Both start with 10,000;
The strategies are the same: win rate of 50%, risk-reward ratio of 3:1;
The only difference lies in risk management:
Trader A: risk of 5,000 per trade (50% of capital), can earn 15,000 if successful, loses 5,000 if not;
Trader B: risk of 100 per trade (1% of capital), can earn 300 if successful, loses 100 if not.
Results of 10 trades: the first two trades lost all.
Trader A: lost all 10,000 capital in two trades, exited directly, losing any future opportunities to profit;
Trader B: lost 500 in the first 5 trades, gained 1500 in the last 5 trades, ending up with a net profit of 1000, increasing capital by 10%.
This is the meaning of risk management: even if the strategy has continuous losses, as long as the risk is controllable, you can endure until profitable trades come to offset the losses. Conversely, if the risk exposure is too large, a single black swan event or several consecutive losses can lead to completely leaving the market.
Remember: the primary goal of trading is not 'how much money to make', but 'how long to survive'—surviving gives you the opportunity to make money.
3. Advice 3:
Three essential elements for profitability: edge, risk management, and discipline, none of which can be omitted.
Many people think that 'trading mindset determines everything', but I want to tell you: mindset is just the result, not the cause. What really determines whether you can be profitable are three key elements: edge (a strategy that makes money), risk management (rules for survival), and discipline (ability to execute). All three are interdependent; one cannot be missing.
Why is mindset not the only factor? Consider this example: if you go to the casino with the best mindset, you will still lose in the long run—because you have no advantage over the casino. Trading is the same:
Having an edge + risk management, but lacking discipline: the strategy says 'do not enter', but you cannot resist the impulse to place an order; when the stop-loss level is reached, you hesitate to cut losses, and in the end, the strategy becomes distorted, losing all capital;
Having risk management + discipline, but lacking an edge: no matter how strictly you execute or control risk, in the long run, you still cannot make money, just lose more slowly;
Having an edge + discipline, but lacking risk management: just like trader A mentioned earlier, a single mistake can lead to total loss.
For me, mindset only accounts for 20% in trading—when you have an advantage strategy validated by backtesting, combined with clear risk management rules, discipline and a good mindset will naturally form. It’s like the 'coin toss game':
Rules: earn 100 for heads, lose 50 for tails, guaranteed to profit in the long run;
Even if you toss tails three times in a row, you won’t panic—because you know the probabilities and risk-reward ratio are in your favor, and as long as the sample size is large enough, you will definitely earn it back.
Trading is the same: the reason you panic or frequently change strategies is fundamentally due to a lack of confidence in your strategy (not validated by a large sample backtest). When you confirm the advantage of your strategy through backtesting, and combine it with risk management, you won’t panic during consecutive losses, and discipline will also become easier.
4. Advice 4: Don’t look for the 'best strategy'
There is no universal strategy, only strategies that adapt to the market.
The most common mistake beginners make is to frantically search for the 'highest win rate, the best trading strategy', thinking that finding it will solve everything— but the truth is: no single strategy can adapt to all markets.
Each strategy has its own 'comfort zone':
Trend-following strategy: making money in trending markets (upward/downward) is as easy as drinking water, but in sideways, choppy markets with many false breakouts, it only results in continuous losses;
Range-bound strategy: performs brilliantly in sideways markets, but when faced with strong trends, it will incur repeated losses.
The market is constantly changing: today it’s trending, tomorrow it may be sideways, and the day after it changes to choppy. If you obsess over finding the 'best strategy', you will only face repeated failures when the market switches, and ultimately your mindset will collapse, leading to constant strategy changes and a vicious cycle.
The correct approach is: prepare 2-3 different types of strategies to cope with different markets. For example:
Use trend-following strategies in trending markets;
Use range-bound strategies in sideways markets;
Use breakout strategies in breakout markets.
This way, regardless of how the market changes, you have the corresponding tools, significantly enhancing overall win rate and profit stability.
The last core reminder:
Trading is not about 'getting rich overnight', but about 'long-term compounding'.
Many people enter the market hoping to 'double their money in a month' or 'achieve financial freedom in a year', thus taking big risks and placing heavy bets— but I have seen all stable and profitable traders, none of them became successful by 'quick doubling'.
Even top traders will have losing months and cannot achieve profits every month. The essence of trading is 'long-term compounding': extending the time frame, earning stable returns with small risks, letting profits roll over, and ultimately achieving exponential growth.
For example: earning a stable 5% monthly, capital increases by 79% over a year; earning a stable 10% monthly, capital increases by 314% over a year—this seems slow, but it’s steady and sustainable. Conversely, pursuing quick doubling, encountering consecutive losses leads to total liquidation with no chance to recover.
In summary: in the early stages of trading, losing less is gaining.
The core message of the above 4 pieces of advice is 4 sentences:
First, find a strategy with a positive edge; do not trade blindly;
Put risk management first; do not let single trade risk exceed 1%-2% of capital;
Edge, risk management, and discipline are all essential; mindset is a natural result;
Do not seek a universal strategy; use multiple strategies to adapt to different markets; long-term compounding is the way to go.
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