The necessity, volatility and unpredictability of stop loss are the most fundamental characteristics of the market, the basis of the existence of the market and the causes of risks in trading. This is an unchangeable feature. There is never uncertainty in trading, and all analysis and prediction are just a possibility. The transaction based on this possibility is naturally uncertain, and the uncertain behavior must have measures to control its risk expansion, so it produces a stop loss. Stop loss is a natural occurrence of human beings in the process of trading, not deliberately created, but an instinctive reaction of investors to protect themselves. The uncertainty of the market makes the existence of stop loss necessary and important.

Successful investors may have different trading methods, but stop loss is the same feature to ensure their success. Soros, a world investment guru, said that there is no risk in investment itself, but out-of-control investment is risky. Learn to stop loss and never fall in love with loss. Stop loss is far more important than profit, because at any time, capital preservation comes first and profit comes second. It is quite effective to establish a reasonable stop loss principle, and the core of the steady stop loss principle is not to let the loss continue to expand. Why it is so difficult to understand the meaning of stop loss is very important, but this is not the final result. In fact, there are many examples of investors setting a stop loss but not executing it. In the market, the tragedy of being swept out of the house is staged almost every day.

Why is it so difficult to stop loss? There are three reasons: one is luck. Although some investors know that the trend has been broken, they always want to have a look and wait because they are too hesitant, which leads to a good opportunity to miss the stop loss; Second, frequent price fluctuations will make investors hesitate, and frequent wrong stop losses will leave lingering memories for investors, thus shaking their determination to stop losses next time; Third, executing stop loss is a painful thing, a bloody process, and a challenge and test to human weakness.

In fact, we can't be sure whether every transaction is in the right state or the wrong state. Even if it is profitable, it is difficult for us to decide whether to go out immediately or wait and see, let alone be trapped. The instinct of human nature to pursue greed will make every investor unwilling to win a few points less, let alone thank a few points. Programmed stop loss is precisely for the above reasons. When the price reaches the stop loss position, some investors miss the square inch and suffer losses, and the stop loss position is changed again and again; Some investors temporarily changed their minds and increased their positions against the trend in an attempt to put all their eggs in one basket to recover losses; Some investors only take measures after the losses expand? Ostrich? Policy, let nature take its course. In order to avoid these phenomena, the author thinks that programmed stop loss strategy can be adopted.

Large international financial exchanges usually provide stop-loss instructions. Traders can set a price in advance, and when the market price reaches this price, the stop loss order will take effect automatically immediately. At present, there is no stop-loss instruction in domestic futures exchanges, but advanced trading tools can be used, which is a simple and effective method to help investors strictly implement stop-loss at present. At present, some domestic trading systems can provide two kinds of stop loss orders: market stop loss and limit stop loss. Market stop loss means that as soon as the market price touches the preset stop loss price, a stop loss order is issued at the market price; Limit stop loss means that as soon as the market price touches the preset stop loss price, the commission will be sent at the limit price. Market stop-loss orders can ensure the success of stop-loss, while limit stop-loss orders can avoid unnecessary losses when prices are discontinuous. Both have their advantages and disadvantages. Usually, market stop-loss orders are used to trade active varieties, and limit stop-loss orders are used to trade inactive varieties. This trading system helps investors to develop good stop-loss habits, thus avoiding risks in the market, minimizing losses, turning passivity into initiative and being invincible in the futures market. How to correctly understand the uncertainty of stop-loss market and the fluctuation of price to decide stop-loss is often wrong. In fact, in every transaction, we are not sure whether to stop loss. If the stop loss is right, we may be secretly pleased. If the stop loss is wrong, there will be not only the pain of reducing funds, but also the pain of being fooled. Psychological blow is the most unbearable pain for investors.

Therefore, understanding stop loss is essentially how to correctly understand wrong stop loss. We also have to accept the wrong stop loss. For a simple example, if your stop loss is correct in trading, it means that your trading is correct every time. If your trading is correct, why stop loss? Therefore, stop loss is a kind of cost, the cost of finding profit opportunities, and the price that must be paid for trading profit. This kind of price is only big and small, and it is difficult to distinguish right from wrong. If you want to make a profit, you must pay a price, including the price caused by the wrong stop loss. Face the wrong stop loss calmly, don't avoid it, and don't be afraid. Only in this way can we trade normally and finally make a profit. This is my understanding of stop loss, including my understanding of wrong stop loss.

One of the problems we should pay attention to? Everything is planned in advance, so it's useless not to plan? All stops must be set before entering the market. When investing in futures, we must form a good habit, that is, set a stop loss when opening a position, and it is often too late to consider what standard to use when there is a loss. Second, stop loss should be combined with the trend. There are three trends: upward, downward and consolidation. In the consolidation stage, the probability of price stop loss making mistakes in a certain range is high, and the execution of stop loss should be combined with the trend. In practice, the author thinks that consolidation can be regarded as an incomprehensible trend, and investors can recuperate. Third, choose trading tools and grasp the stop loss point. This varies from person to person. It can be a moving average, trend line, shape and other tools, but it must be suitable for you. Don't use it blindly because others use it well. The determination of trading tools is very important, and the ability to use trading tools will lead to completely different trading results.

In short, trading pays attention to a sound trading strategy, in which fund management can be regarded as the core and stop loss is the soul. Only by doing a good job in fund management and strictly stopping losses can we have a steady stream of water and become a constant winner in the market.