Trading Wisdom: Unveiling the Truth Behind Stop Loss and Liquidation

On the journey of trading, we often rely on stop loss to avoid risks, set positions, and control single losses, but can this really be the universal key to preventing significant losses?

In fact, while stop loss can prevent instant liquidation, the root cause of liquidation does not lie in the stop loss itself. Heavy trading is the hidden time bomb. Under heavy positions, psychological pressure is ever-present; whether to stop loss or not is like walking on a tightrope—one misstep could lead to a fall into the abyss.

So, can light trading allow us to rest easy? In reality, the significance of stop loss in light trading is far from a decisive factor. Light trading gives us greater margin for error, allowing us to exit calmly when the market truly reverses, rather than frequently stopping loss in volatility, which wears down our will.

Stop loss, this seemingly simple action, actually contains profound knowledge. It is not a fixed rule but an art that needs to be flexibly adjusted according to individual trading systems and market conditions. Blindly stopping loss and not using stop loss are equally dangerous; the key lies in finding the right stop loss method for oneself.

Frequent trading and frequent stopping loss are major taboos in trading. True stop loss should be a flexible range rather than a fixed point. The turning of trends requires time; market fluctuations have their own rhythm. A reasonable stop loss should be about actively exiting after a clear trend reversal, rather than sacrificing unnecessarily during fluctuations.

To avoid liquidation, the key lies in controlling position sizes and maintaining composure. Enter with light positions and gradually increase the size, allowing trading to progress steadily. When the market turns, decisively exit; the condition for stopping loss should be the failure of entry conditions, not just a simple breakout of patterns.

Remember, the essence of market fluctuations is closely linked to time and trends. Stop loss should not just be cold points, but a profound understanding of market dynamics and a flexible response.

In this contest of wisdom and courage, may every trader find their own path to stop loss, making the journey of trading more stable and bright.

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