Why is it said that holding onto a position is necessary! How to properly set a stop-loss!!!

You must always remember your liquidation price, which is essentially your stop-loss price. By blindly averaging down, you lower your liquidation price,

and wait for a so-called miracle. The result is that this time you hold on, but what about the next time or the time after that? It might be after suffering significant losses that everything gets wiped out completely.

Setting your liquidation price equal to your stop-loss price is a psychological reminder that you need to prepare yourself before entering a position, and assume that you might get liquidated.

Therefore, before opening a position, you should try to shorten the distance to your liquidation price by controlling your position size and leverage as much as possible. At the same time, you need to think about it.

What should you do if you get liquidated? This way, you earn the right to make money in this market and prove that your direction and judgment are correct.

So how can you avoid holding onto a position? A simple method is to set a stop-loss upon entering the market. After setting a stop-loss, do not manually widen the stop-loss.

Generally, when entering the market, the stop-loss is often set at some key levels. If these key levels are broken, it indicates that the direction you entered may be wrong, and therefore it is reasonable to exit the position with a stop-loss. Additionally, try not to take counter-trend positions. For example, in an uptrend, when it reaches a key resistance level, it may encounter resistance and pull back, but it may also break through directly.

When reaching a key resistance level, many people tend to take a short position on the idea of encountering resistance and pulling back. If this trade doesn't work out, it can easily turn into a holding position or even lead to averaging down against the trend. Therefore, try not to take counter-trend positions; when reaching a key level, it might be more appropriate to exit previous trend-following positions and observe. Because when trading against the trend, it is uncertain whether the market will continue, and if it does, it is also unpredictable where it will stop.