2026-01-18 15:24:34

The most common pitfall in contract trading is not technical but a deadly cognitive misconception: measuring success and failure by win rate.

I have seen too many traders boast about their 80% win rate, only to find their accounts shrinking at the end of the month. What's the problem? The risk-reward ratio.

A very common phenomenon: when making profits, they only take 5% and then exit; when losing, they stubbornly endure a 50% loss. Making ten $50 profits and one $500 loss. No matter how you tally this, the final result is negative. This is not bad luck; it's human nature at play.

When profitable, we fear giving back gains and rush to lock in profits. When losing, we cling to hope, imagining a market rebound. The market is like a hunter, most skilled at exploiting this mindset.

The only way to break this cycle is to make the risk-reward ratio the top priority.

My approach is straightforward. If a trade's potential profit does not reach at least twice the potential loss (risk-reward ratio ≥ 2:1), I do not take it. This is not missing opportunities; it's about surviving longer.

How to do it? Three steps:

First, calculate everything before entering a trade. Determine where to set stop-loss and take-profit levels, ensuring the profit potential is at least twice the loss potential. Otherwise, do not open the position.

Second, use tools to avoid emotional trading. Pre-set take-profit and stop-loss orders to automate execution. This makes it difficult for market fluctuations and temptations to influence you.

Finally, develop the habit of recording and reviewing trades. Note the actual risk-reward ratio of each trade, and at the end of the month, review overall performance to identify areas for improvement in entry and exit points.

The essence of trading is not about who is right more often. The true winner is the one who dares to let profits run when the timing is right, and cuts losses quickly when wrong. Discipline to lock in losses and let advantages grow naturally is the only rule for long-term survival in the market.

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NervousFingers

· 16h ago

To be honest, our 80% win rate strategy has long been mastered by us—being hesitant when making profits and aggressive when facing losses, ultimately still losing out due to the risk-reward ratio.

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ForkLibertarian

· 16h ago

80% win rate but still losing money, how impressive is that, haha --- Make 5% profit and then run, lose 50% holding on, isn't that just most people's self-portrait? --- Only trade when the risk-reward ratio ≥ 2:1, sounds simple but really damn hard to do --- Human nature is just the prey of the market, no problem --- Automating take profit and stop loss—I've should have started using this a long time ago, it's too easy to fall into traps --- Always calculate everything clearly before opening a position, sounds right but also feels like missing out on many opportunities --- Discipline is the most expensive lesson

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RebaseVictim