Over the years, I have reminded traders and friends around me more than once, not to pay too much attention to accuracy, because it is not what really helps you make money in trading (even if it is the top trader on Wall Street, according to past statistics , their accuracy rate is only 30 to 40%, and those who can exceed 50% are rare). Therefore, stop loss should be a normal thing for traders, and it even occurs more frequently than profit opportunities. However, traders still need to pay attention to the risks after the stop loss.
The basis of stop loss is not equal to the basis of reversal. Don't easily change the original judgment
Most of the time, the reason why traders stop loss should be because the original reasons for holding positions have been destroyed (the structure has been broken, the indicator signal has disappeared, etc.), and stop loss is undoubtedly a wise choice at this time. When the previous reason for holding a position is destroyed, some traders will simultaneously understand it as the basis for market reversal, but in fact these are two different things.
The picture above shows the trend of oil prices from the second half of 2017 to 2018. At that time, OPEC had already extended the production reduction agreement for 6 months. At the same time, the oil price began to pick up under the situation that the implementation of production reduction gradually recovered and the demand side recovered. This is the reason for long oil prices. The main reason is, in addition, from a technical perspective, if a trader goes long on the upward trend line, he should have more profit opportunities in the early stage, but if the trend line breaks down, theoretically, the bulls should stop loss and leave the market, because the technical position grounds were breached;
However, because the demand side is still improving, OPEC+ agreed to extend the production reduction agreement until the end of 2018 at the end of November 2017, and conducted a midway assessment in June 2018. At this time, Venezuela also began to be sanctioned by the United States, so it still did not support it at that time Shorting the oil price, and the oil price correction is also temporarily supported at a small level; so if at this time traders also regard it as a short signal after the long stop loss, they may stop the short loss again after the long stop loss.
Therefore, after the current position stop loss, traders need to reorganize the logic of price fluctuations and provide new basis for future transactions. Apply rote and easily change your original position.
If the market wants you to lose and you can't afford to lose, the market will let you lose more
We are talking about things after the stop loss, so it is obvious that you have already closed the position at this time, and the loss is already established. Originally, all this is the best ending, because although the loss is at least under control. But some traders don’t think so. What they think is how to earn back what they lost as soon as possible. As a result, Pandora’s magic box is officially opened: chasing orders, heavy positions, frequent trading, deadweight, until exhaustion. a bullet. I don’t know which ones you have experienced. Anyway, I experienced them all in the early days. After being taught a lesson by the market, I suddenly realized that all of this did not have to happen when I was dying in a “pool of blood”.
If you have a similar experience, then this is another suggestion of mine: after the stop loss, you must admit the loss, and don't think about taking it back from the market for the first time, otherwise you will no longer be your loser before you know it. , the account will also soon become accountless.
It is true that stop loss under normal circumstances is a very common thing, but careful traders may find that it is not this that causes many traders' accounts to suffer disaster, but that after the stop loss, a With an inadvertent move, the risk really begins to come at this moment.
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