As a trader, I must tell you, always set stop-loss at key levels! Profit and loss are two sides of the same coin; if you don't let go of the child, you can't catch the wolf! You must endure floating losses to enjoy profits! (Of course, the entry point is also crucial; otherwise, you might lose your capital after a few stop-losses, which I'll discuss next time.)
A mature trader must set stop-loss and take-profit for each trade. Taking profit is straightforward; it's just about making more or less money, and after all, everyone is happy when making money. However, stop-loss is a challenge. If the stop-loss space is small, a minor pullback might hit the stop-loss, and then the market goes in the opposite direction, leaving you regretting your decision.
If the stop-loss space is too large, you might lose all your capital with each trade. The break-even stop-loss is a commonly used method; after generating profits, it's usually set at 3 points, meaning the break-even price becomes the stop-loss point. This way, while you preserve your capital, the market trend may often reverse after hitting the stop-loss, leading to the situation of 'seeing correctly but acting wrongly.'
So, key level stop-loss and take-profit are more reliable, but how to set them? I recommend four simplest methods:
The first is the trendline take-profit and stop-loss method:
For example, if you short at the yellow circle, you can track the trend, and when a second high point appears, draw a descending trendline. You can take profit at the red circle; once the trendline is broken, sell immediately to take profit.
The second is the moving average take-profit and stop-loss method:
For example, you can buy when the 7-period moving average breaks above the 30-period and 60-period moving averages at the bottom. If it falls below the 30-period moving average, sell immediately. This is exactly like the legendary turtle trend strategy, tried and true!
The third is the key level stop-loss and take-profit method:
For example: if you short at the top of the red box, then when the price breaks above the key level of the platform consolidation, stop-loss immediately. If going long, you can use the moving average stop-loss method, going long above the 180-period moving average, and continue to hold as long as it doesn't break below.
The fourth is the Fibonacci stop-loss method:
For example: you can draw Fibonacci retracement levels at the highest and lowest points of the previous wave, finding key levels such as 78.6%, 61.8%, 38.2%, and 0%. The 61.8% level, known as the golden ratio, is particularly important. You can see that Bitcoin quickly dropped after breaking below the 59342 golden ratio line. If shorting, pay attention to these key points and open a short position quickly upon a breakout. The opposite applies for going long.
The above four methods are commonly used stop-loss and take-profit techniques by professional traders. Use them flexibly according to the market situation and the underlying asset. Learn to think critically!
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