Free Narrow CPR Stock Scanner: Daily Shortlist for Breakout Trades
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Every trader loves a great trade story. A big short, a huge trend, a life-changing profit. But the stories that get repeated are usually edited: the ending is kept, the middle is deleted.
In a conversation about trend following, Jones talked about being short Japan and making a lot of money from that trade. Then he added something people rarely hear: he had been short five times before that, and took a small loss each time.
That one detail explains a lot about how trend following really works.
When we hear "he made a fortune shorting Japan", our mind pictures one clean, brilliant trade. What actually happened was a sequence: entry, stop-loss, re-entry, stop-loss, again and again, until the market finally trended.
The visible success of the last trade does not tell the whole story. The trader paid for several failed attempts before he was in the right position when the major move arrived. Without those attempts, he would not have been there.
Let us use R, where 1R is the amount you risk on one trade. Suppose the eventual big move looks like this:
| Attempt | Result |
|---|---|
| Attempt 1 | -1R |
| Attempt 2 | -1R |
| Attempt 3 | -1R |
| Attempt 4 | -1R |
| Attempt 5 | -1R |
| Attempt 6 | +15R |
| Net result | +10R |
Only 1 out of 6 trades won, a win rate of about 17%. Yet the sequence is clearly profitable. This is the core of trend following: small, controlled losses and occasional large wins. Your risk-reward ratio does the work, not your win rate. (The numbers are illustrative, not a promise of any result.)
This is also why fixed risk per trade matters. If each of those five losses had been 5% of capital instead of a small, defined amount, the trader might never have survived to attempt number six.
Jerry added an important point about the Turtle system. Someone can read the Turtle rules and understand:
but that does not automatically mean they can execute the system effectively.
Rules fit on one page. Following them on the 5th consecutive losing trade, when your confidence is low and every voice says "this doesn't work anymore", does not fit on any page. That gap is where most traders quit, right before the trend they were waiting for.
The actual experience of these things is not a side effect of learning a system. It is part of learning the system:
Every one of these builds a muscle. The first time you sit through a drawdown, it feels like failure. The tenth time, it feels like a normal part of the process. You cannot download this from a book or a video. You can only build it by trading small, following rules, and reviewing honestly.
Whether you trade NIFTY, BANKNIFTY or stocks, the same logic applies to breakout and trend trades:
Yes. Many trend-following systems win less than half the time. Profits come from winners being much larger than losers.
R is your initial risk on a trade. If you risk ₹1,000 and lose it, that is -1R. If you make ₹15,000, that is +15R.
The Turtles were a group of traders trained in the 1980s by Richard Dennis and William Eckhardt to follow a rule-based trend-following system.
Knowing a strategy is not the same as executing it. Fear after losses, overriding stops and exiting winners early are execution problems, not knowledge problems.
It depends on your win rate, but streaks of 5 or more losses can happen even in a good system. Position sizing should be set so such a streak does not damage your account.
Yes. Start with small size, or paper trade, and log every trade in R. The aim is to practise following rules through losing streaks.