There is a saying in the investment industry: Those who can buy are apprentices, and those who can sell are masters. In a market that is affected by countless variables and it is impossible to find definite rules for short-term operations, it is extremely important for investors to establish a profit and loss target. This is what is commonly known as the concept of "stop loss" and "stop profit" . So is it good to have a long-term stop profit and stop loss in stock trading?

As for stop loss, Buffett’s famous saying is widely circulated: The first rule of investment is to avoid risks as much as possible and preserve the principal; the second is to avoid risks as much as possible and preserve the principal; the third is to firmly remember the first and third rules. Two items. Preserving the principal means preserving the opportunity to start over.

The concept of "stop profit" is particularly important in a bull market, because it is extremely difficult to exercise restraint on profits in a bull market. The optimism generated in a bull market often makes people think that the stock price or the net value of the fund will continue to rise. , although even rational people know that this phenomenon is impossible to happen, most people are unwilling to sell their funds or stocks when the market is still rising and there is no sign that the rise will stop.

Setting goals and strictly executing them can protect us from short-term investment. Investors can determine their own "profit stop point" based on their personal "appetite" for profits and their ability to bear risks. and "stop loss point". It should be noted that the establishment of stop profit point cannot be divorced from the reality of the market. We can refer to the actual value-added situation of the market in the past long period of time (you can also refer to the data of more mature markets) to determine a more mature market. Once the profit growth target that may be achieved is reached, the set "falling into safety" procedure can be entered.

Is it good to use long-term stop-profit and stop-loss in stock trading?

Any stock technology has a premise. The premise is that it is the result of a correct analysis, which is at least relatively correct or reasonable. of. Stop-profit and stop-loss is a kind of discipline. The purpose of discipline is to ensure the safety of principal, but it is not a way to make money

The real profit rule of the stock market is that when making money, you must make it decisively. When losing money, you must stop losses decisively. Moreover, the setting of stop-profit and stop-loss points is very important. Many people regard ranges such as 5 and 10 as stop-loss lines, but they have never thought about whether the setting of such stop-loss lines is reasonable. For example, a stock's normal retracement range is exactly 15. You think the stock is good when it pulls back to 5, so you buy it, and then trigger your stop loss line when it pulls back to 15. As a result, as soon as you sell, the stock immediately resumes its upward trend. The reverse is also true.

So take-profit and stop-loss are necessary, but how to correctly set the take-profit and stop-loss positions is the real key.