Convexity Trading Rules: Let Profits Run, Cut Losses. To achieve long-term profitability in the market, the most fundamental requirement is to establish reasonable entry and exit rules, known as 'trading rules'.

However, excellent trading rules are not just about finding the right timing for entry and exit, but also about maintaining flexibility during market fluctuations and making adjustments in different situations.

The concept of 'convexity' is a very important trading idea proposed by Taleb, with its core being to allow profits to be unlimited while controlling risks within an acceptable range.

In simple terms, we need to 'cut losses and let profits run'. For example, a common trading rule is to buy when the price breaks through a key level, and to sell when the price falls below a support level.

The key to this rule is that 'profits are unlimited', as the market sometimes provides unexpected explosive opportunities. Meanwhile, 'losses are limited'; regardless of how the market fluctuates, stop-losses must be set to avoid significant losses. Simple and effective trading rules are based on maintaining anti-fragility while maximizing returns and avoiding large losses.

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