Stop loss is wrong, but it is also right
This sentence has some truth. Understand it from the following perspectives:
1. Risk management perspective
In trading or investment, setting a stop loss is an important risk management method. Even if the market trend reverses after the stop loss, it seems that the stop loss is wrong this time, but it effectively controls the potential greater losses. If you do not set a stop loss, once the market is extremely unfavorable, it may lead to huge losses, and may even make you lose the ability to continue to participate in the market. In the long run, adhering to the stop loss principle will help protect your funds in an uncertain market environment and maintain the sustainability of trading.
2. Psychological level
When you strictly implement stop loss, even if the result seems "wrong", it can give you a sense of discipline and psychological stability. You will know that you have clear rules to follow in trading, and you will not be swayed by emotions and fall into a dilemma that you cannot extricate yourself. This psychological certainty helps you stay calm and rational in the long-term trading process, and avoid falling into an emotional trading trap due to a wrong decision.
3. Trading strategy perspective
Trading is a probability game, and no strategy can guarantee 100% correctness. Stop loss is only part of the trading strategy, and it cannot determine the success or failure of a transaction alone. Even if a stop loss seems unnecessary in hindsight, it helps maintain the consistency and stability of the strategy from the perspective of the overall trading strategy execution. As long as your trading strategy is effective in the long run, the "error" of individual stop losses will not affect the overall profit results.
In short, "stop loss is wrong, but it is also right" emphasizes the importance of stop loss in risk management, psychological level and trading strategy execution. It reminds us to stick to principles in trading and not to easily give up stop loss as an important risk control method because of individual unsatisfactory results.
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