Trading and Pyrrhic Victories

Pyrrhic Victories is one of my favourite concepts. Not only because it is so fun to say out loud but also because it is applicable to literally everything if you are feeling curious.

Although this concept long predates its origin story but its a good one nonetheless and requires frequent retellings. Rome as a city state was on the on the up and coming and neighbouring city states were getting quite concerned of these developments. Greek Cities in particular were getting nervous and thought Rome was being too uppity. So they reached out to Pyrhhus of Epirus to come and give hell to Rome and cut it down to size. Pyrhhus of Epirus said something along the lines of “Hehe why not” and he came west with his well trained forces, War Elephants and all. ( Most Roman soldiers had never seen an elephant before this and were shaken.) He defeated Romans in battle, went back to Greece, came back again a year or so later, and beat them again. While he was being congratulated for these victories, he was asked if they should give it another shot . His response was something along these “Hehe, If I get one more such victory, my whole kingdom will be destroyed”. This was because in both battles, Romans had put such a strong resistance and fought like complete madmen, that his victories came at a horrendous loss of life and capital on both sides. He was never seen again in these parts.

This story forms a good basis for any kind of decision making.Trading being entirely about decision making is no exception. Let us see how this concept works in different trading situations :

1. Day Trading : This is why long term Day Traders are my favourites. They literally do Pyrrhic Victory as a full time profession. The amount of concentration, energy, homework and drain full time professional day trading takes, it fits neatly into this box. But if you can manage this for decades at an end, you will make even Pyrrhus proud, keep at it. Respect.

2. Options Trading : Pyrrhic victory here is to decide whether or not to defend your strategy which has not worked. Whether you should leg in to your strategy, come up with a plan, and risk even the adjusted strategy getting attacked ( very common when starting out). This takes work, know-how and effort. So the decision here is whether you should do this to save your losing strategy, to make it breakeven or scrape a small profit. Or simply book the loss and set up another, potentially more beneficial trade. I prefer booking loss but I will agree defending strategies is fun, so again its preference-based.

3. Systems Trading : Making a system over the years takes a lot of work, fine tuning, experience and fails. So the question to ask here is, even if I end up making a great system which works for me over 3-5 years, time tested, weather tested. Bells and whistles. How long will I continue to use this, and how hard is it to tweak with changing market conditions. Is my system a Pyrrhic System ?

4. Penny Stocks Trading : You bought a good amount of the cheapest thing money can buy, with full conviction that this memestock will moon. Literally nothing happens for 5 years. Then one day out of nowhere, that stock zoomed 100%, you got out. It can only be considered a good trade, if you are sure you couldn’t have gotten the same return elsewhere, with less risk, and more sleepful nights, and less embarrassment of telling people that you are holding those kind of goods in your portfolio.

5. Stock Investments : Many people invest in companies at the top, the stock falls 50% and stays there for 2 years. You never sold it so as to not hurt your pride, after a lot of crying and sadness it came back at your price, goes up 5% more. You sell immediately. On paper, yes you didn’t lose money but 5% for 2 years is more red then it is green. Thus reasonable stops are there to protect you from letting your investments go pyrrhic.

There might be many more instances, would appreciate if you can spot them and add to the discussion. Also do let me know if i wrongly identified something under this concept. Thanks :slight_smile: :+1:


I may not be entirely correct and disagreements are welcomed. I think “buying the dip” concept itself is pyrrhic. I have never been a fan of this, but when one buys the dip with an intention of making it a big game, can make him/her overlook the potential cost. What if the trend continues? How going against the trend can cost? Been there, done that. Earned after buying the dip, but then till date i still ask myself the same question, at what cost? No worth. Currently, going through another same scenario XD.

Nice post my man. Overall, gave a new piece of information.

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Or simply - There is no free lunch. Risk is part of reward. And you need an edge.

Right now i day trade only using a system developed over many years first through discretion and now scaled up with full automation in last couple of years. Happy with it, inspite of having to deal with a tough year ( Still good enough returns and much better than index). Automation removes most of the emotional burden of trading. Its there but now much more manageable. Also taking a lot of trades gives you decent perspective of the probabilistic nature of edges.

Main task is to compound capital, reach a stage such that setbacks are easily managed, and expected. Once you are more or less financially free plus have good diversification, i think the effort will be worth it ( for me atleast … ), And its fun …

So main point is - Is this fun for you ? If not, cannot sustain.

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Yes, merely the knowledge of knowing something is Pyrrhic does nothing much.It is inevitable that you would be forced into playing Pyrrhic games whether you like it or not. Like take the Romans in this example, they were just minding their own business at that time, and just figuring themselves out. Out of nowhere some dude with a rhyming name starts doing donuts with Elephants and forces you to fight. It simply cannot be avoided at times. Especially when one does not have the luxury of choice. i.e Money has to be made somehow, Or Money has to be invested somewhere fast. The only thing that can be done, is to force yourself to not play too many Pyrrhic games at once. Which happened to everyone during WWII. Those guys were playing 50 P-Games at once and everyone took the L of the millennium.

The Reverse of P Victories is Decisive Victory. Victories that are clean, beautiful, symmetrical, orderly, swift, lightning, give the highest pound-for-pound return to the effort put in. India’s victory over Pakistan in 13 days, resulting in the formation of Bangladesh was the best decisive victory in recent history.

I was wondering what Decisive Victory looks like in the Indian Capital markets perspective. After some thought I found it.

This right here is beautiful and the closest you come to free lunches. It would not require a galaxy brain to say, okay I have some capital, let me put it into any of the Tata Group companies. These guys know how to build strong high-quality companies and brands. Lets see what happens.


I dont have numbers, but from what i feel many of these companies, esp the bigger ones, had poor short term returns during Mistry drama. I think TCS was the main outlier, TM TS were struggling. So that’s the risk part as things wont always go your way.

Just investing in a diversified dalio type all seasons funds should probably give good enough returns over inflation from an investing mindset, with much reduced risk. Stocks + gold + bonds + commodities i think. But still there is always some risk. Task is to take good risks in a diversified way with only so much effort that you are willing to undertake.

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Nifty is up 130% from the Mar’20 lows…so I guess this is fine.

Trading and pyrrhic victories . Trading and investment are no way related if done the right way. Frankly people should quit trading if they lose 20% or DD is 20% . Because to make 10% gain it would would be required to make 30% back. That’s when people start chasing losses making leveraged trades to win back and losses catch up like pyhrric

Let’s break down some facts here :-

Day trading :- if you are using tried well tested system with money management things work. I think 15mins and 5 mins time frame are hell. But 1 hour time frame is doable. If you are a reversal trader you are definitely pyhrric because markers trend all the time.

Options trading :- it’s pyhrric if you don’t know where the market is headed. Again trading via news events and fundamental analysis are exactly like the story says. There might be great wins but lot of losses.

Systems trading :- this doesn’t require 3 to 5 years. It requires 3 to 5 years of historical data to backtest (only for daily timeframe) and a year or 6 months of forward testing. The logic here is in 6 months if you made 6% trading or able to get more returns than nifty index then use system. Otherwise you are better off buying index funds.

Penny stock trading:- never buy an individual penny stock. The risk is very high and it makes sense. The more risk equivalent is the reward. Better to enter via mutual fund like small cap.

Stock investments :- buy stock if you know the company and product very well. But same for penny stock and stock investments better plan your money management. Split your portfolio like 20% small cap/ individual stock + index fund or any other portfolio.

At the end of days it’s managing your risks and being consistent.

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