We often make profits, sometimes even substantial ones, but soon those gains get wiped out or turn into losses. No matter how hard we try, we can't seem to hold onto our profits, which leaves us frustrated and confused: Why can't we keep our profits?

This is a common problem in trading—after painstakingly earning profits during a trend, we quickly give them back in subsequent consolidations or corrections, often ending in losses. The confidence we built up disappears in an instant.

1. Doing Wasteful Trades When the Market Doesn’t Justify Participation Is the Main Reason We Can't Keep Our Profits

After earning significant profits in earlier, smoother markets, we get overconfident and start loosening our entry criteria and lowering our thresholds for trading, leading to many unnecessary trades.

What are unnecessary (“wasteful”) trades? Simply put, they're low-value trades, with low probability of success, poor risk-reward ratios, or trades taken impulsively just because there's price movement, regardless of the quality of the opportunity.

Good profits from earlier trends often blind us to risk, making us skip evaluating possible returns versus the risks and success probability of trades—we act on wishful thinking, convinced that every opportunity is one we can’t miss.

In such a mindset, we often enlarge minor opportunities in our own minds, acting impulsively and carelessly. However, the market is not always in a tradable state—in fact, most of the time, it's in consolidation or chaotic moves with poor trading opportunities. Wasteful trades typically occur during these periods, resulting in low success rates or poor risk-reward. Because of human nature, most trades end up in losses during such periods.

2. Too Many Wasteful Trades Lead Us to Miss Big Moves When They Arrive

Excessive wasteful trading not only drains our accounts, but also leaves us unable to seize major, familiar opportunities in future trends. These frequent losses damage our trading psychology, so when real opportunities do arise, psychological shadows from earlier losses make us hesitant and fearful.

Furthermore, the habit of frequent trading turns us into “flies,” always eager to take profits quickly and run, even during major trends, causing us to exit too soon and miss bigger gains.

In short: Wasteful trading results in slow, steady losses during trendless periods, and forms bad habits that inhibit us from holding positions during real trends, making sustained profits impossible.

3. How to Eliminate Wasteful Trades: Only Trade Familiar Setups, High-Probability, and Good Risk-Reward Opportunities—Stay Within Your Circle of Competence

Many traders don’t understand that speculation means waiting for real opportunities. A speculator is like a hunter—if you don’t see your prey, you don’t shoot. Only shoot when the prey is close and you have a good aim.

Wasteful trades are like shooting at anything that moves—regardless of whether it’s your prey, if it’s close, or if you can hit it. This not only causes you to miss your real targets but scares them away.

Such trades aren’t true speculation; they’re just gambling for short-term satisfaction. They’re irresponsible and driven by the need to trade, with the process being briefly pleasurable but the outcome usually negative.

Wasteful trading is characterized by randomness, impulsiveness, following the crowd, and excessive frequency. Why do so many people do it? Because the strong desire for profit makes them unwilling to miss any market move—especially after big up or down days, they mistakenly believe every move is a significant opportunity.

Most traders lack their own system, so any price fluctuation seems like a tradeable opportunity. Without distinguishing between genuine and false setups, they inevitably do many wasteful trades—which breeds losses.

Profit is the trap; most trades actually result in losses and risk should be prioritized. Not trading wastefully does not mean not trading at all, nor does it guarantee avoiding losses. There are always losing trades, even from seemingly valid setups. The point is to only take familiar, high-probability, and reasonable risk-reward trades—stay within your competence.

Every trade must be carefully considered: know your stop-loss, ensure your entry is justified by market conditions and trends. Sometimes you can foresee opportunities but can’t fully capture them; only trade opportunities that you both see and can grasp. Such opportunities are rare each year—this is a time-tested reality.

4. Recognize the Difficulty of Consistent Trading Profits; Adopt a “Not Losing Is Earning” Mindset, Treat Each Trade as Your Last Bullet to Greatly Reduce Wasteful Trades

It’s often hard to judge the quality of trading opportunities and market scale; risk is always present while profit is uncertain. Many traders are lured by illusions of profit into frequent, reckless trades. If you clearly understand that most trades lose money and that not trading is sometimes the most profitable approach, you can outperform 80% of traders and reduce wasteful trades.

If you treat every trade as your last chance to succeed, you’ll be more cautious and serious, which greatly reduces wasteful trading.

5. Limit Your Trading Frequency—For Example, Allow Yourself Only Five Trades per Month. This Makes You Value Each Trade, a Practical Strategy

Charlie Munger said if you’re only allowed to punch 20 holes on a card, and each hole is one trade, you’d cherish each opportunity. If you limit yourself to five trades a month, every trade counts, and running out of opportunities means you’ll miss out on major trades when they arise.

So, before each trade, ask yourself: Is this a major opportunity? Is this within my strength? Only take trades with high conviction—otherwise, you’ll have no “bullets” left when the big opportunities come.