If you have truly received systematic trading training, then the first professional lesson should be stop loss.

What is stop loss

So what about stop loss?

Stop loss refers to timely closing trades when you judge that there is a deviation in your expectations, in order to avoid the expansion of losses.

Because our stock speculation is based on expectations, whether it is technical analysis or fundamental analysis, all data and trends are speculative.

The fundamental aspect of technical analysis is to continue the current trend without the influence of external forces, which is speculation;

Fundamental analysis is the prediction of future business conditions based on current financial data, which is also speculative.

So since there is speculation, there will be deviation. At this time, in order to avoid falling into a trap due to one mistake, stop loss is very important.

In fact, not only in the stock market, stop loss in the stock market can make your funds more flexible. More importantly, in leveraged futures, forex, and other scenarios, if you don't understand stop loss, your ultimate outcome will definitely be liquidation. Just like the news circulating in the financial circle a while ago, 'Futures tycoons jump off buildings in the early morning and lose 145 million yuan in ten days', this is the serious consequence of not stopping losses leading to liquidation.

More importantly, no stop loss

Stop loss requires the courage of a brave warrior to hold back, especially in leveraged trading, which is a necessary quality for traders.

But we need to know that the stock market is different from the futures and foreign exchange markets.

In theory, the effect of not stopping losses is at most that funds are trapped and unable to buy new investment targets in the long run.

The ideal stop loss situation is that after the stop loss, the new target purchased compensates for the loss and brings in a profit, which is commonly referred to as a stock swap.

How many people know what frequent stop loss and post loss are?

Stop loss, the general standard in the industry is 10%, which means that if the loss reaches 10%, it needs to be executed according to discipline.

This itself is not a problem, where is the problem?

If you invest once and your principal is 100000 yuan, then the principal after stop loss is 90000 yuan. If you make a profit on your second operation after stop loss, then you don't just need to increase by 10%. The 10% increase in your stop loss line will only bring you to 99000 yuan, and your principal will not return.

To exaggerate, if you experience 5 stop losses and eliminate the effect of compound interest, you should have lost 50%. If you want to recoup your losses, your future operations will not be to make a 50% profit, but to make a 100% profit, which means * *.

That is to say, if you stop losses too many times, although a single stop loss may not be significant and you avoid large fluctuations in future single operations, the overall loss after several stops is still significant. In this situation, it is difficult for you to make profits again.

This is the other side of stop loss, or frequent stop loss.

Private investors often use the phrase 'bought one stock, fell, switched to another, and then changed again' to describe it.

Thinking twice before taking action is the most important thing

So, when you delve deeper into investment research, you will find it very interesting.

Your first investment lesson tells you to be disciplined, stop losses in a timely manner, and avoid the expansion of losses.

After many times of your investment behavior, you will find that too many stop losses have swallowed up the hard-earned profits with just a few "disciplined" stop losses.

This is a very practical problem.

Actually, both of these phenomena are normal and logically correct.

What's the problem?

It's just that you can't stop losses frequently, or in other words, trade frequently.

Because when you invest, you will find that the probability of success is much lower than the probability of failure. That is to say, out of 10 stocks you choose, only two or three actually rise well later, while most of them perform average.

The probability of each investment target making money is actually very low.

Stop loss is important in investment, and more importantly, 'no stop loss'

So the more frequently you trade, it's not that you have a higher probability of success, but that you will lower your investment capital due to stop loss. The reduction in investment capital will have a huge side effect on your returns.

More difficult 'no stop loss'

The most difficult thing is not to cut losses.

What does' no stop loss' mean?

Just think twice before taking action.

I often compare investment to a sniper, because this action is definitely more in line with the market.

Stop loss is important in investment, and more importantly, 'no stop loss'

You have bullets, but you are not Buffett. Buffett's strength lies not only in his value investing philosophy, which is more profound than that of ordinary people, but also in the fact that he relies on insurance companies. In theory, he has endless bullets, and your funds are just that.

A few easy moves, perhaps your proud disciplinary actions such as stop loss, will result in a significant loss of principal. When the real opportunity arises, your earnings will undoubtedly be greatly discounted.

The key to making big money is not buying and selling... but waiting, "said the great writer Jesse Livermore

That is to say, if you really want to make a significant leap in investment returns, the first step is to wait.

When the opportunity arises and the investment target meets the requirements, actually place a bet.

In a scenario where there is no stop loss and no way out, your choices will be more rigorous.

Not stopping losses may be another investment constraint.

It's like playing chess, where there are no regrets in the end.