No Trade, No Loss

Article translated from: https://botacademy.ddns.net/

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This phrase often appears when traders complain about losing trades. But it's no joke — to some extent, it's the truth, and an important one at that. Beginners tend to focus too much on crafting the perfect exit strategy. How do I exit quickly when a trade is losing? How do I avoid exiting too early right before a surge? How do I do this, how do I do that, and so on. All of it revolves around exits, while entries are often neglected. For example, let's look at this question.

Hello, I understand that stop-loss is crucial for risk management. But my stop-losses are causing big losses. My bot trades spot on a minute-by-minute basis and currently has a win rate of 63%, yet I'm still at a loss, because a single big stop-loss can offset several winning trades. I've set fixed stop-loss and trailing stop-loss, and the stop-loss is usually triggered in the following two scenarios:

As clearly pointed out above, the problem isn't the exit point — it's the entry point. The entries are too loose, often buying at price highs. If you keep focusing on exit points, you'll never solve this problem, because either

• You set very strict take-profit logic and frequently exit with small gains, but you'll still face the problem of large losses, or
• You set very strict stop-loss and take-profit levels and discover that many trades only dip briefly before rising again (which is very common in cryptocurrency trading), meaning you miss plenty of trades that could have been profitable and have to accept many small losses.
• You keep the existing loose stop-loss and take-profit logic and retain the same "roller-coaster profit chart" problem.