To understand what a stop loss price is, one must first understand what a stop loss, also known as "cutting meat", refers to the timely liquidation of an investment when the loss reaches a predetermined amount, in order to avoid forming larger losses. The stop loss price is a protective mechanism that prevents the situation from getting deeper and deeper. When the set stop loss price is reached, the system automatically closes the position and exits.

1、 Definition of Stop Loss

When the stock price drops to the lowest level you can afford, sell decisively to reduce losses.

Some people also refer to stop loss as "cutting meat", but there is a difference between stop loss and cutting meat. Relatively speaking, investors who choose stop loss generally have their own operational strategies and will choose to sell stocks at appropriate points in a timely manner to minimize losses; Investors who choose to cut their profits are generally blind and lack operational strategies. They regret not selling their stocks early when they have already suffered severe losses. Most of them choose to sell their stocks when they have suffered significant losses, resulting in larger losses.

Why is stop loss so difficult?

Understanding the significance of stop loss is important, but it is not the ultimate outcome. In fact, there are numerous examples of investors setting stop losses without executing them, but in reality, there are very few friends who execute them, resulting in frequent tragedies.

In fact, every time we trade, we cannot determine whether it is in the right or wrong state. Even if we make a profit, it is difficult for us to decide whether to immediately exit or hold and wait, let alone be trapped. The instinct of human nature to pursue greed will make people unwilling to win a few points less, let alone be grateful for a few points.

Finally, when trading stocks, one should be rational and have a good mentality, rather than blindly listening to news, chasing gains and losses, always thinking that others' stocks are good, and not being greedy. Success is equal to small losses, plus large and small profits, accumulated multiple times.