Often friends come to me for drinks, and when we talk about trading, they always sigh: 'Brother, I know I should follow the trend, I believe in trends, but why does every time I enter after a breakout, I get repeatedly 'hit in the face'? Is trend trading a scam?
Actually, most people's 'belief in trends' is heavily biased by survivorship bias.
You believe in trends because when you review past trades, you only see those breakouts that immediately take off and surge violently. What you're actually infatuated with isn't the trend itself, but the fantasy of 'breaking out and escaping cost basis, then soaring straight up'.
But the real challenge of trend trading lies not in the 'false breakout', but in your inability to face the 'muddy mess' when the trend unfolds.
1. Two heart-wrenching truths: Why can't you hold onto the trend?
Trend traders usually die in two pitfalls:
You have illusions about the form of trend unfolding: You only allow the market to accelerate in the way you expect (breakout → surge).
But the reality is that most trends will undergo extremely unpleasant corrections after breaking out; if your stop-loss is too tight, it’s a sure loss; if it's too loose, it’s a tiring grind.
You lack the mechanism and courage to 'replenish': Many times, your stop-loss is fine, the market indeed corrects, and after it sweeps away your position, it starts up slowly again.
At this point, do you still have the confidence to get back in? Do you have a standard 'replenishment mechanism'? Most people lose their mindset at this moment.
The reason you suffer is that you have preset a 'clean and neat' path in your mind; once reality does not match your preset, your standards are thrown off, and your mind becomes scattered.
2. Accepting the 'posture of loss' is the beginning of cultivation.
For analysts, there are true and false breakouts; but for us traders, a breakout is the present, while a false breakout is the future.
A mature trader looks for patterns to establish standards not to avoid losses, but to 'accept the loss posture they choose'.
The secret to profit lies in: I have accepted the 70% 'muddy mess'.
I spend 10 minutes every morning on defense, and for the rest of the time, I drink tea or exercise as I please.
I don’t watch the market because I know that once I focus on that fluctuating number, I will start to micromanage the market’s 'twists and turns'.
True trend trading is when you remain calm and follow the standards again when the next signal appears, even after being swept out by the market's correction.
3. Your account needs a 'soul audit'.
If you are still losing sleep over 'being trapped after chasing the breakout', or hopping back and forth between 'should I stop-loss or not', take my advice: Stop learning new indicators, what you need is an audit of your trading data.
Many people find trading difficult because they think too much and do too little.
Please start from your trading data, look at your maximum profit and maximum loss, and most importantly, whether the number of times your profit exceeds your maximum loss can account for 10% of your trades; this is a hard standard, and as long as you meet this standard, profit will come naturally!