The principle of setting stop loss point

Stop loss is a necessary means to control risks. Investors should have their own styles on how to use the stop loss tool well. In trading, it is very important for investors to grasp the overall position and trend of the market. In the high price circle, stop loss is often used, in the low price circle, it is used less or not, and in the middle price circle, it should be determined according to the market movement trend. Following the trend and making good use of stop loss points is the only way for investors to win.

There are two types of stop loss point setting methods: the first type is formal stop loss, that is, when the reasons and conditions for buying or holding disappear due to changes in market conditions, the position should be closed or stopped immediately. The second type is auxiliary stop loss. In practice, the maximum loss method, retracement stop loss, sideways stop loss, expected R multiplier stop loss, key psychological price stop loss, tangential support level stop loss, and moving stop loss are often used. Moving average stop loss, cost moving average stop loss, Bollinger channel stop loss, volatility stop loss, K-line combination stop loss, chip-intensive area stop loss, CDP (operation against the trend) stop loss, etc. Investors should make judgments based on their own risk tolerance and choose a stop loss method that suits them.

1. Once the stop loss point is set, it is not recommended to change it frequently if it is not necessary. It should be implemented decisively. The stop loss point is actually the premise and guarantee for profit

2. The stop loss point should be set before each transaction

3. The stop loss point can be changed flexibly, but it must not be changed overnight

4. Before setting the stop loss point, it must be based on the current general trend