On the long journey of trading, many traders who have struggled for years gradually come to realize a seemingly contradictory yet critically important truth: trading, in essence, is a probability game about stop losses. However, most people enter the market with a completely opposite belief — pursuing absolute certainty, resisting losses, and yearning for overnight wealth. These mindsets, rooted in our upbringing and educational background, become the deepest and most stubborn traps on the trading path.
We have been taught since childhood that hard work will be rewarded, and knowledge brings definite answers. But the financial markets are not like that. There is no 100% 'inevitability' here, only endless 'possibilities.' Price fluctuations are driven by countless factors working together, filled with randomness and unpredictability. Trying to find certainty here like a mathematical formula is akin to fishing for a rabbit up a tree. True trading wisdom begins with calmly accepting this uncertainty — this is not a passive compromise but a clear understanding of the foundation.
Since uncertainty is the essence of the market, losses are by no means accidental mistakes, but an inevitable part of the game's rules. Just like tossing a uniformly weighted coin, even if your win rate reaches 50%, the probability of heads and tails remains equal in the next toss. Resisting losses is like resisting gravity; it will only make you fall harder. How many of the regrettable trading stories began with significant profits, only to result in total defeat because they could not bear a single loss and stubbornly held on? Accepting the inevitability of losses is the first psychological divide between professional traders and amateur players.
This acceptance must be concretized into the iron rule of action: stop-loss. Stop-loss is the only certainty you can actively control in this game of probability. It does not mean 'error,' but rather the pre-planned cost you pay for exploring market possibilities. It is your survival mechanism and the anchor of your mindset. Only by strictly executing stop-loss can you limit losses to a controllable range, maintain your qualification to participate in the game, and wait for the moment when probability tilts in your favor.
So, how can one survive and even profit in this uncertain game in the long term? The answer lies in understanding and optimizing the dynamic balance between win rate, risk-reward ratio, and stop-loss. You will discover two typical stable profit models:
High win rate model: the win rate is relatively high, but the cost is usually a small risk-reward ratio or a longer holding period. This means you need to use more correct trades to cover a few but potentially larger losses.
High risk-reward ratio model: the win rate may be less than 50%, but profits far exceed losses. This requires you to have strong patience and discipline, using a few substantial profits to compensate for multiple small losses.
These two modes do not have an absolute hierarchy, but both hinge on a core principle: resolute stop-loss and meticulous management of risk-reward ratios. Trying to pursue both high win rates and high risk-reward ratios often means enduring uncontrollable massive risks, 'dancing on the edge of a knife,' the result of which is usually brilliant yet fleeting.
Therefore, the mature way of trading lies not in predicting every market fluctuation, but in establishing and adhering to a system that includes the following elements:
Embrace uncertainty: let go of the obsession with 'perfect trades' and 'being 100% correct.'
Proactively accept losses: view stop-loss as a necessary cost and part of your trading plan.
Focus on risk-reward ratio: do not pursue illusory windfall profits, but steadily 'earn only what belongs to your own system.'
Maintain consistency: within the framework of probability, execute your trading strategy long-term and steadily.
The ultimate realm of trading is increasingly distanced from technical indicators or mysterious signals, and is ever closer to profound inner cultivation. It concerns whether you can thoroughly internalize a concept: the essence of the world is impermanence, especially in the market. A true trader, after realizing all this, can still calmly set stop-losses, decisively enter and exit trades, and accept any outcome with equanimity. When you no longer fight against uncertainty but learn to dance gracefully within it, you will have found your own long-term place in this game of probability.
This, perhaps, is the most precious realization that the trading market offers to those who persevere: in the vast ocean of uncertainty, stop-loss is the only raft you and I have, while probability is the guiding star that can ultimately be trusted.