#止损策略 In the ever-changing investment market, stop-loss strategies act as a solid defense line, protecting investors' capital safety and being one of the key elements for achieving stable investments.
The importance of stop-loss strategies
Avoid huge losses
The investment market experiences frequent and unpredictable price fluctuations, and the leverage mechanism and margin system in the futures market can exponentially amplify risks. Without a stop-loss strategy, investors may suffer huge losses during unfavorable market changes, even losing everything. Just like the case mentioned by Brother Yong with Client A, who heavily shorted rebar in futures trading without any stop-loss concept in the face of rising prices, ultimately being forcibly closed out and suffering significant losses.
Stabilize investment mindset
Continuous losses can easily cause investors to fall into anxiety and panic, leading to irrational decisions. A stop-loss strategy can set a clear loss threshold for investors, reducing the emotional interference in investment decisions, allowing them to remain calm in the face of market fluctuations and invest rationally.
Improve capital utilization efficiency
When an investment performs poorly, timely stop-loss can allow funds to flow back, making room for more potential investment projects, thus enabling more effective use of funds and increasing the possibility of overall investment returns.
Common stop-loss strategy methods
Fixed amount stop-loss method
Investors pre-set a fixed loss amount, and when the investment loss reaches that amount, they immediately close the position to stop loss. This method is suitable for situations with small market fluctuations, is simple and direct, and can clearly control the maximum loss for each investment.
Percentage stop-loss method
Set the stop-loss margin based on a certain percentage of the investment principal, generally between 5% - 15% of the investment principal. This method is more flexible and can be adjusted according to the investor's risk tolerance and investment goals, suitable for volatile market environments.
ATR ratchet method
This is a relatively novel stop-loss strategy, based on the idea of selecting a starting price and then adding a multiple of the ATR (Average True Range) daily to obtain a trailing stop-loss point. Compared to traditional stop-loss methods, it allows for more freedom in choosing the starting price and adjustment speed, and the stop-loss point is influenced not only by time factors but also by price acceleration, reflecting changes in market volatility in real-time. For instance, when achieving a profit target of more than 1 ATR, a recent low can be selected as the starting price, and then the lowest price can be increased daily by a certain multiple of the ATR based on the holding period.
Key points for applying stop-loss strategies
Combine market and variety characteristics
Different investment varieties and market conditions have different characteristics; investors need to choose suitable stop-loss strategies and set reasonable stop-loss points based on specific situations. For example, for stock investments, key support and resistance levels in technical analysis can be referenced to determine stop-loss points; for futures trading, factors such as contract expiration time and market liquidity must also be considered.
Strictly execute stop-loss orders
Setting a stop-loss point is just the first step; more importantly, it is to strictly execute it. Many investors neglect stop-losses due to a sense of luck or overconfidence during actual operations, resulting in further losses. Therefore, investors should cultivate the habit of firmly executing stop-loss orders and truly implement the stop-loss strategy into their investment actions.
Dynamically adjust stop-loss points
As investment conditions develop, investors can dynamically adjust stop-loss points based on market trends and investment return situations. For example, in stock investment, when stock prices rise, stop-loss points can be gradually raised to lock in some profits while maintaining the remaining position to continue participating in the upward trend.
Stop-loss strategies are an indispensable important component of the investment process, helping investors protect capital safety in market risks, stabilize investment mindset, and improve capital utilization efficiency. Investors should fully recognize the importance of stop-loss strategies, master common stop-loss methods and application points, and integrate them into their investment systems. Only in this way can they proceed steadily on the path of investment and achieve long-term investment goals.