To know what a stop-loss price is, you must first understand what a stop-loss is, also called "cutting meat", which means that when the loss of a certain investment reaches a predetermined amount, the position will be liquidated in time to avoid the formation of larger losses. The stop-loss price is a protection mechanism to avoid getting deeper and deeper. When the set stop-loss price is reached, the system will automatically close out the position.
1. The definition of stop loss:
When the stock price drops to the lowest price you can afford, sell it categorically to reduce losses. Some people also call stop loss "cut meat", but there is also a difference between stop loss and cut meat. Relatively speaking, investors who choose stop loss basically have their own operating strategies and will choose to sell stocks at the appropriate point in time. , The loss can be minimized; and investors who choose to cut meat are generally blind and have no operational strategies. They regret not selling early when the stock has already suffered a serious loss. Most of them will choose to sell when the loss is serious. If you drop the stock, the loss will be larger
Why is it so difficult to stop loss? .
It is important to understand the meaning of stop loss, however, this is not the final result. In fact, there are many examples of investors setting a stop loss but not executing it, but in fact, there are very few friends who execute it, and tragedies often occur.
There are three reasons:
First, the psychology of fluke. Many people also know that the trend has broken, but because of hesitation, they always want to take a look and wait, which leads to miss the opportunity to stop loss;
Second, frequent price fluctuations will make people hesitate, and frequent wrong stop losses will leave investors lingering memories, which will shake the next stop loss determination;
Third, the execution of stop loss is a painful thing, a bloody process, and a challenge and test of human weakness.
In fact, every time we trade, we cannot determine whether it is in the right state or the wrong state. Even if it is profitable, it is difficult for us to decide whether to go out immediately or wait and see, let alone in a quilt state. The instinct of human nature to pursue greed makes people unwilling to win a few points less, and even less willing to lose a few points. Finally, stocks must be rational, and more importantly, they must have a good attitude, instead of blindly listening to the news, chasing the rise and falling, always feel that other people’s stocks are bullish, not to be greedy. Success is equal to small losses, plus large and small profits, accumulated many times.