An effective way to stop losses in stock trading
This is the simplest stop loss method. It refers to setting the loss amount to a fixed ratio, and closing the position in time once the loss is greater than this ratio. It is generally applicable to two types of investors: one is investors who have just entered the market; the other is investors in markets with greater risks (such as futures markets). The mandatory effect of fixed stop loss is relatively obvious, and investors do not need to rely too much on their judgment of the market. The setting of stop loss ratio is the key to fixed stop loss. The ratio of fixed stop loss consists of two data: one is the maximum loss that the investor can bear. This ratio varies depending on the investor’s mentality, financial affordability, etc. It is also related to investors’ profit expectations.
The second is the random fluctuation of trading varieties. This refers to the disorderly price fluctuations caused by the behavior of market trading groups when there are no external factors. The setting of the fixed stop loss ratio is to find a balance point between these two data. This is a dynamic process, and investors should set this ratio based on experience. Once the stop loss ratio is set, investors can avoid being shaken out by unnecessary random fluctuations.
2. Unconditional stop loss method
Stop loss that runs away regardless of cost is called unconditional stop loss. When the fundamentals of the market undergo a fundamental turning point, investors should abandon any illusions and rush out regardless of the cost in order to preserve their strength and choose the opportunity to fight again. Changes in fundamentals are often difficult to reverse. When fundamentals deteriorate, investors should act decisively and close their positions.
To sum up, stop loss is a necessary means to control crises. Investors should have their own styles on how to make good use of stop loss tools. In transactions,
It is very important for investors to grasp the overall position and trend of the market. Use stop loss more often in high price circles, less or no use in low price circles, and it should depend on the market movement trend in mid price circles. Going with the trend and making good use of stop loss levels is the only way for investors to win.
3. Technical stop loss method
The more complicated one is the technical stop loss method. It combines stop loss setting with technical analysis, and sets stop loss orders at key technical positions after eliminating random market fluctuations to avoid further expansion of losses. This method requires investors to have strong technical analysis capabilities and self-control. The technical stop loss method has higher requirements for investors than the former one, and it is difficult to find a fixed mode. Generally speaking, using the technical stop loss method is nothing more than betting on a big profit with a small loss. For example, after buying on the lower track of an upward channel, wait for the end of the upward trend before closing the position, and set the stop loss position near the relatively reliable average moving line. As far as the Shanghai stock market is concerned, when the market index rises, the 5-day moving average can maintain the short-term trend, and the 20-day or 30-day moving average will maintain the mid- to long-term trend. Once the rising market starts, you can intervene at the 5-day moving average and set the stop loss near the 20-day moving average. You can not only enjoy most of the profits brought by the staged rising market, but also get out of the way in time when the head is formed to ensure profits. . In the early stage of the rising market, the distance between the 5-day moving average and the 20-day moving average is very small. Even if you misread the market and stop loss near the 20-day moving average, the loss will not be too large. For another example, after the market enters the consolidation stage (set), a box-shaped or converging triangle pattern usually appears, and the deviation rate between the price and the mid-term moving average (usually the 10-20 antenna) gradually decreases. At this time, investors can intervene at the maximum technical deviation rate and set the stop loss position at the maximum deviation rate of the game. In this way, you can enter low and go high to get the price difference. Once the deviation rate of the price from the mid-term moving average is magnified again, it means. If the price turns into a downward trend at this time, investors should leave the market decisively. The game is relative to the unilateral market. In the early stage of the market, the market is unstable and fluctuates greatly, so traders can boldly intervene. In the later stage of the game, the stop loss range should be appropriately narrowed to increase the insurance factor.
