I believe that 90% of traders understand the meaning of the term 'stuck', and have deeply experienced the feeling of being trapped. However, in my view, even though the term 'being stuck' is widely mentioned, it is actually a very unskilled expression and one of the most common mistakes in this industry—being trapped in the market indicates that you do not have a clear stop-loss plan and cannot face your own failures. It's like being dumped by your girlfriend (or boyfriend) and still desperately waiting for them to change their mind for the rest of your life. Some people think that as long as they haven't closed their position, it is equivalent to having no loss at all—however, what is the difference between this and burying one's head in the sand? I believe that 'being stuck' itself is a fundamentally flawed approach.
So what should the correct trading posture be?—From the moment you enter the market, you should decide on your stop-loss position. If the market subsequently falls below this level, you should close your position without hesitation. Moreover, the setting of the stop-loss price should follow objective market logic, rather than your subjective feelings. For example, 'If I lose 10%, I will exit', 'If I lose xxx amount of money, I will exit,' these are all incorrect stop-loss methods—there are many key price levels in the market, and once the candlestick crosses these key levels, it can easily lead to panic, resulting in a new market direction, and these key levels are where we should set our stop-loss. A few simple examples include: the position of the 20ma in a trending market, the last low or high point of market volatility, market resistance and support levels, etc. Once these levels are breached, it can easily cause a shift in the balance of power between bulls and bears, making it much less likely for the price to return to your 'break-even' level in the short term. Thus, these levels are often used by traders as stop-loss points.
So,
if after you exit with a stop-loss, the price returns to your entry position. You could have achieved a zero-loss break-even, but because you executed a stop-loss, you incurred a loss—does this mean you shouldn't use stop-loss? No. This usually means that your method and position for stop-loss need to be reconsidered, but it does not mean that the act of using a stop-loss itself is wrong. Throughout our long lives, we will perform thousands of stop-loss actions. Throwing away expired food is a stop-loss, quitting a job is a stop-loss, breaking up with a girlfriend (or boyfriend) is also a form of stop-loss. Stop-loss is not a term exclusive to the financial industry, but a universal life wisdom. It's just that in the market, which is unfamiliar to most people, achieving reasonable and appropriate stop-loss requires a certain technical threshold. Like other life skills, the ability to stop-loss also needs to be slowly refined and improved.
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