Open the trend chart, identify what you believe to be the worst period in history, and see what happens to your method during that time. If you can still succeed, then congratulations, your method is qualified.
Every method has its flaws, just to varying degrees; there is no perfect method. Even if the trend chart doesn’t look great in the coming years, a method with strong resilience has a strong vitality. Trends and consolidations are phenomena that can only be seen after they have completed; no one knows anything beforehand or during.
Therefore, the most basic requirement for a method is that it should not be able to distinguish between trends and consolidations in advance.
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Assuming no transaction fees, with a win rate of 50% and a profit-loss ratio of 1, if you continue to do this long-term, you will neither make nor lose money, which is a neutral state; if the win rate remains unchanged but the profit-loss ratio increases slightly, then you will make money long-term without any loss; if the profit-loss ratio remains unchanged but the win rate increases slightly, then you will also make money long-term without any loss; if both the win rate and the profit-loss ratio increase, then you will make huge profits long-term.
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Clearly, whether you can make money depends on these two factors, and behind these two factors are three actions: opening a position, holding a position, and closing a position. Behind these three actions are four compromises that lie between precision and ambiguity: position, quantity, frequency, and error. In summary, it is: at what positions, how much quantity to open each time, where to hold the position, how many times to persist in opening, and the overall execution error must all be within the theoretically permissible range.
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There are some correct platitudes: short at highs, long at lows, go with the trend, risk small for big gains, light positions, prioritize stop-loss, take profits when it's good, and don’t be greedy. Although they are correct, the difficulty lies in execution because they are not refined into methods.
