In trading, some believe in buying more as prices drop, while others use stop-losses. Which one is correct?

The premise of buying more as prices drop is the judgment that this is a pullback in a rising trend, so one buys more as it drops during the pullback.

If it is a declining trend... then that can also be the case.

This is determined through various methods, including fundamental analysis, technical analysis, and other techniques, to judge that this decline is approaching its end.

Such declines generally have a rough target point, for example, estimating that this round of decline is around 2590 points.

If it breaks below that and there are no other fundamental or technical changes leading to further decline, then one must stop-loss; otherwise, it is just self-deception.

Stop-loss is a risk management tool, which demonstrates the maximum loss I can bear when I realize my judgment is incorrect. This is also a trading discipline for entering and exiting trades. If the price goes up after executing the stop-loss, then just buy it back. One cannot conclude that your stop-loss was wrong at that moment; rather, one should use the execution of discipline as a standard for performance assessment and not look back.

Of course, there is also an extreme case, which is strictly betting in a downtrend according to grid trading without stop-losses. This is another trading system, and I don't think there is anything wrong with this trading method. As long as a method is applicable to the market environment at that time, it is effective.

So the two are not contradictory; they are complementary tools that belong to your own trading system.

Moreover, these two are not the focus; the key is your correct judgment of the trend, which is the most crucial part of investing. In fact, most retail investors only chase after rising prices and only cut losses when there is a real pullback, not buying during the pullback.

I understand retail investors very well.

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