Let's talk about an important concept in trading - Stop Loss

A stop loss can be simply understood as a way to preserve capital and avoid significant losses, but its core purpose is to evade uncontrollable emotional one-sided market movements. Many people start to doubt their strategies after a few stop losses, and some even completely overturn their entire trading system. A truly mature system will consider stop loss as a crucial element within the system, rather than seeing it as a cost of mistakes. The purpose of a stop loss is to prevent reckless trading and to ensure you maintain the qualification for rational trading.

Many people think of stop loss as a way to reduce losses, but in reality, most people subconsciously treat it as a tool for predicting the market. Often, when they set a stop loss, the market rises right after, leading to regret and the thought, 'If I had known, I wouldn't have set the stop loss.' Next time, they simply don't set one. But have you ever considered that you are using the stop loss as a tool to judge whether you are right or wrong? A stop loss has never been a precise prediction tool; it is not meant to control the market, but rather to cut off the spread of emotions and cognitive loss of control.

Therefore, the purpose of a stop loss is to allow you to stop when you are wrong and to continue when you are right. Let's encourage each other!