The Insights of Setting Stop-Loss in Contract Trading (II)
Contract trading involves both high risks and high returns, and the setting of stop-loss plays an indispensable key role. Stop-loss, in essence, is a risk control measure aimed at preventing excessive losses.
In contract trading, there are various methods for setting stop-loss. For example, fixed point spread stop-loss, which is like setting a fixed distance that triggers when a certain percentage of loss occurs; when the price fluctuation reaches this distance, the stop-loss is executed. There's also percentage of funds stop-loss, which determines the stop-loss limit based on a certain proportion of the invested funds; support and resistance stop-loss, which is set based on key support and resistance levels in market price fluctuations; and hedging stop-loss is another method. Different traders, due to their own trading styles and risk tolerance, will choose different stop-loss methods.
Through numerous practical cases, we can observe the specific operational steps and methods for flat short stop-loss, flat long stop-loss, chasing up long stop-loss, and chasing down short stop-loss, etc. This helps traders deeply understand the principles behind stop-loss, thereby enhancing their trading skills.
However, setting a stop-loss is by no means a simple task. One must consider various factors such as market trends, whether it is rising, falling, or consolidating; the characteristics of the trading variety, as different cryptocurrencies have different volatility patterns; trading time, as market activity varies in different periods, and many other factors. When determining the stop-loss position and magnitude, it is essential to base it on one's trading plan and risk tolerance, ensuring the effectiveness and rationality of the stop-loss, and not setting it blindly.
Finally, it must be emphasized that in the cryptocurrency space, whether in contract trading or other operations, the basic knowledge related to spot trading cannot be overlooked. Spot trading is the foundation of futures, representing real value that can be used for buying and selling exchanges. For beginners, understanding spot trading is a crucial step to entering the cryptocurrency space, as it helps grasp market dynamics. Once again, any basic knowledge in the cryptocurrency space may impact returns, so it should not be taken lightly.
