Take Profit and Stop Loss

In the world of investment trading, take profit and stop loss are two unavoidable topics. Which is harder: take profit or stop loss?

Stop loss, to put it bluntly, is about cutting losses. When the market trend does not match our expectations, it is crucial to stop loss in a timely manner. However, achieving this is really difficult. Stop loss means admitting that one’s judgment was wrong, which is psychologically hard for many people to accept.

Take profit sounds like a happy thing, but it’s not that easy. When investments are profitable, many people become greedy and hope to earn a little more, often missing the best take profit opportunity. Sometimes, you think the market will continue to rise, but it suddenly falls, and this feeling of being caught off guard can be quite frustrating.

I believe many people, especially novice investors, have encountered the same problem. So, what should we do?

1. Develop a Trading Plan: Before each trade, be sure to create a detailed trading plan. This plan should include key elements such as the buying price, selling price, stop loss point, and take profit point.

2. Set Reasonable Stop Loss and Take Profit: The settings for stop loss and take profit should be based on one’s risk tolerance and market conditions. There are many specific methods, such as fixed percentage method, dynamic stop loss (take profit) method, and technical indicator stop loss (take profit) method, etc. Generally, a widely accepted maximum stop loss point is 10%. The take profit point can be set a little higher, but it should also be reasonable to avoid excessive greed.

3. Stay Calm and Rational: The most important thing in investment trading is to remain calm and rational. Do not be swayed by short-term market fluctuations, and do not let your emotions affect you.

In this internet age, learning various investment techniques and trading models is easy. However, I believe the most important factors are discipline and mindset. If there is an opportunity, we can discuss this specifically. Whether it’s take profit or stop loss, investors need to possess a good psychological quality. It is advisable to start from developing a trading plan, setting reasonable stop loss and take profit, staying calm and rational, and flexibly responding to market changes to gradually improve one’s trading ability.

The above are some basic suggestions shared with everyone. Feel free to leave comments and discuss in the comment section, dear "leek friends".