The launch of a major market trend requires the rise of the sector to drive it; The sustained rise of a sector is driven by its leader; And the leading stocks in the leading sector are often the most popular and certain stocks in the market, which often hit the limit up frequently and are prone to sustained limit up.

Today, let's first talk about the issue of stop loss.

Whether to cut losses or not is a question that many people struggle with. There are many psychological traps here, such as anchoring psychology and sunk costs, which often lead investors to choose ostrich policies.

However, mature investors are not troubled by this, as losses are a part of trading. Once you have successfully established a high probability trading system, every entry and exit you make is based on reason and evidence. You only need to execute according to the system, without worrying about the success or failure of a single transaction.

1、 Establish stop loss thinking

We have all heard of stop loss, but in reality, there are few people who can strictly implement it, especially retail investors who are reluctant to let go of the three words. Most people are unwilling to cut losses due to psychological issues, not related to technical skills, as gamblers have a severe psychological state. There are a lot of people like Macau, just look at those gold watches in the pawnshops.

I have a friend who is now a private equity trader and I have known him for many years. His usual practice is short-term trading and he never engages in medium to long term operations. The stop loss level he set for himself is 4-6%. If it exceeds this range, no matter what the future holds, he will immediately cut his losses.

There have been a few times when I watched his stocks turn red or rise sharply the next day after he appeared, but he never got tempted by it. His statement was that stop loss was because my expectations were wrong, and continuing to hold stocks with wrong expectations was adding to the mistake. Regardless of whether they would rise or fall later, there was still a possibility of profit when I switched stocks, which was an opportunity; But if it keeps falling, I won't even have a chance.

Stop loss, why can't most people achieve it? In fact, stock trading is about personal cognition and operational discipline. Only through practice can one understand where they win and where they lose.

2、 Under what circumstances should a stop loss be implemented?

1. Firstly, in terms of the overall direction, significant policy disadvantages have occurred. When there are major changes in national and industrial policies that are not conducive to the company, for example, when the country reorganized Internet finance last year, P2P companies should be vigilant.

2. The company's own fundamentals have undergone significant negative changes. This mainly includes significant losses, being investigated by regulators, executive accidents, and being exposed to major negative news by the media. Once these situations occur, it is better to be eliminated first. For example, LeTV.

3. The company's stock price has seriously broken through. In the absence of significant negative news, a sudden drop in stock price, especially below important support levels, is likely due to significant negative news that has not yet been publicly disclosed. To prevent larger black swans, it's better to temporarily avoid them.