for day trading, I know loss is unavoidable. even if you have a high winning odds(let's say 60%),the probability says there is still 1% chance that you lose five trades in a row. 1% is small, but it is still not rare. if you are over leveraged, the draw down could kill you. This is why Kelly Criterion can be applied to decide right amount of leverage given your edge. However my guts tell me in some market condition, your edge could disappear, and if you keep fighting trend, your trades are highly correlatd to each other and no longer independent events. How experienced traders deal with such situation?
I made the mistake of swing trading into X (US Steel). What made me not abandon the lousy swing trade is, every time I pressed the sell button, there was a high probability of X dropping in price. I kept repurchasing it at a lower price. Without adding new money, I went from 348 shares to 385 shares, just by selling & repurchasing. It seems that X has finally bottomed and my reluctance to abandon X is now paying off. I'm glad I put up with X.
To the OP, it sounds like your edge is a system, which can often works if you look in hindsight, but in reality doesn't work so well. The problem is your system.
You want to use an edge that places probability in your favor whether the market (or your trading instrument) is rising or falling. Here is a G-rated edge, suitable for all traders: You short a second lower high, or buy a second higher low following a strong move in the other direction. You place a stop loss that's half the amount of your profit target. Why does this setup work more than 50% of the time (giving you a statistical edge)? Because when a strong move in one direction (3-5 pushes in the trend), is followed by the first LH/HL, trend-followers look to take at least some profits, and by the time a second LH/HL is put in you have a confirmed reversal signal and the opposite camp jumps in as the former trendies exit their positions before profits evaporate. Here's a nice example using SPY. SPY was in a strong uptrend from 2/5 through 4/26. During this period there were no second lower highs. However, when price opened gapped down and fell on 5/4 after attempting to resume the trend on 5/3, it left a second lower high. Bulls are now nervous because this was the first confirmed reversal signal in 3 months and price was now fully beneath the 20-day moving average for the first time as well. Did the bulls throw in the towel at that point? The smart ones did! This with-trend, high probability setup resulted in a complete trend reversal and a no-heat ATM machine for trend-following swing traders. Why does this style of trading produce profitable traders? Because you combined a greater-than-50% probability in your favor with a 2:1 reward/risk ratio. There is no reason to fight a trend. If you personally think price has gone too high or too low, what reason would you have for trading in the opposite direction without a confirmed signal that price is truly tired and will likely retrace some or all of the move? Seriously, answer this question. Give one good reason for trading in the opposite direction of a trend-in-progress PRIOR to an actual signal that price has a strong chance of reversing. Counter-trend trading is for very experienced traders who have a deep understanding of the price action that precedes a pullback. The timing of the entry has to be impeccable and unforgiving risk management is required. If you're fighting a trend-in-progress, you are absolutely right, your trades are no longer independent events based on valid signals; your trades are gambles based on the (incorrect) opinion that because a coin came up heads 10 times in a row, it's more likely to come up tails on the 11th toss.
True, no markets ever remain the same forever. But neither do smart traders. They personally evolve over time. They also become very efficient at adapting to changing market conditions. Having said that, you should never fight trends. When in doubt, stay out. Otherwise, become a flipper!