Stop-loss is the process of cutting off an investment when the loss reaches a predetermined amount in order to avoid the formation of a larger loss. The purpose of this is to limit losses to a small amount in the event of an investment mistake.
An important difference between forex investing and gambling is that the former can limit losses to a certain extent through stop losses while maximizing the rewards of success, in other words, stop losses make it possible to gain large profits for a small price.
Stop loss is both a concept and a plan, but also an operation. Stop-loss concept means that investors must strategically understand the importance of stop-loss in stock market investment, because in the high-risk stock market, the first thing is to survive before talking about further development, the key role of stop-loss is to enable investors to better survive.
Note:
1. All stop losses must be set before entering the market.
2. Stop losses should be combined with trends. There are three types of trends: up, down and consolidation. In the consolidation phase, the probability of the wrongness of a stop loss in a certain range of prices is greater, therefore, the implementation of the stop loss should be combined with the trend.
3. Choose a trading instrument to grasp the stop-loss point.
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