VIEWS: 5 PAGES: 9 POSTED ON: 9/28/2010
2 Institute of stop-loss to reduce investment risk ? ? ? The need to stop Volatility and unpredictability of the market's most fundamental characteristic, which is the basis of the market there is also the risk of trading in the cause, this is an immutable characteristic. Transactions never certainty Forecasts are just all the analysis is a possibility, Genju this possibility be a transaction entered Zi Ran is uncertain, uncertainty ÐÐÎª have to have measures to control the Fengxian the expansion stops so produced. Stops are human beings naturally occurring process, not intentionally produced, is an investor to protect their instinct, market uncertainty created the need for the existence and importance of stop-loss. Successful investors may have their own different ways of transaction, but the stop loss is to protect their common features of success. The world's investment guru George Soros said that the investment itself is not the risk of loss of control have the risk of investment. Society Stop, Do not, and loss of love. Stop important than profits, because any time preservation is the first, and profit is secondary, a reasonable stop-loss principle quite effective, careful not to stop loss is the core principle of continued expansion. Why is so hard to stop Understand the meaning of stop-loss is important, however, this is not the final result. Indeed, investors did not stop the implementation of set examples abound, the market was driven out of the tragedy played almost every day. Stop why so difficult? There are three reasons: first, the chance of psychological cause trouble. While some investors also know the trend has been Powei, but too hesitant, always want to look, wait a minute, resulting in their missing a golden opportunity to stop; second, the frequent price fluctuations will make investors hesitate undecided, the regular stop error will leave lingering memories of investors to shake investors to the next stop of the determination; Third, the implementation of stop loss is a painful thing, is a bloody processes is a weakness of human nature challenges and tests. In fact, each transaction is correct we can not determine the status or error status, even if the profit, we also difficult to determine the immediate appearance or hold wait and see, let alone in a fitted state. Greedy instincts of human nature to pursue each and every investor will not want to win a few points less, much less thanks to a few points. Programmed stop It is for these reasons, when prices reach the stop bit, some investors miss the square inch, hesitate, stop here again and change; some investors changed its mind, contrarian jiacang, desperate attempt to recover losses; Some investors to expand after the loss, it simply "ostrich" policy to let matters drift. To avoid these phenomena, I believe that they can take programmed stop-loss strategy. International Futures Exchange on large orders usually provide stop. Traders are able to pre-set a price, as market prices reach this level STOPS ordered the immediate effect automatically. The domestic futures exchange has not yet stop loss orders, but futures trading can make use of advanced tools to help investors, which is now strictly enforce the stop of a simple and effective method. Currently, some domestic trading system can provide two kinds of market and stop stop stop-loss order. Stop price is touched to the market price of a default stop price, sending the market price immediately stop commissioned; limit stop is in the market price of a hit to the default stop loss to limit the time to send commission. Stop market order to ensure a successful stop, and stop limit orders are to avoid discontinuity in the price of unnecessary loss of time, both have their advantages and disadvantages. Typically, active species in the closing market price of stop-loss orders to use, and in the variety of transactions using inactive limit stop-loss order. This trading system will help stop investors to develop good habits, and thus avoid the risk of the market, so to minimize the loss of so passive to active in the investment market in an invincible position. How to understand the stop-loss Market uncertainty and price volatility are often determines the stop-loss would be wrong. In fact, in each transaction, we also did not know that this should not stop, if stop-loss on the may be barely disguised pleasure, stop wrong, then not only have the funds to reduce the pain, there will be a kind of fooled pain, spiritual combat is the most unbearable pain of investors. Therefore, understanding how to stop correctly understand the essence is the wrong stop. Wrong we should embrace that stop, give a simple example, if you stop in the transaction are correct, it means that your every transaction is correct, and if your transaction is correct, then why should it stop? Therefore, the stop loss is a cost, the cost of the search for profit opportunities, trading profit is the price we must pay for such costs only sizes, hard to right or wrong, you have to profit, they must pay costs, including errors caused by stop-loss price. Comfortable with the wrong stop, not to evade, not to fear, the only way to continue normal trading, and ultimately profit, which is the author's understanding of the stops, including stops on the wrong understanding. Attention First, "forewarned is forearmed, then do not waste pre-", all the stops must be set before entering. Regular activity performed investment, we must cultivate a good habit, is the time to set up Jiancang stop, but re-appear at a loss to consider what criteria to use often too late. Second, stop with the trend to combine. There are three trends: up, down and consolidation. In the consolidation phase, the price range in a nature stop error probability of large, therefore, stop to and trends in the implementation of the combination. In practice, I can not understand that the correction can be considered a trend, investors can recuperate. Third, the selection of trading tools to grasp the stop bit. This is to vary, it can be average, trend lines, patterns, and other tools, but must be suitable for them, and do not let someone put to good use you make use of them blindly. Determine the very important trading tool, and ability to use trade tools will result in completely different trading results. What is the stop price Stop price is a protective mechanism to avoid the more sets of deeper, when the stop price set to reach, the system automatically open out. Stop 3 bogey Known as the investors stop short with one prerequisite for the short-term operation-loving investors, will help stop loss of control of their investment within a certain range, so it is regarded as important magic weapon for short-term operation. Nevertheless, the stops, I think that still should be cautious as well. Stop-loss is a double-edged sword, after all, meant stop flesh, flesh, if frequent stops frequently, then the stock market in a big long cut into small retail investors, while small retail investors have thus canceled the account into the stock market in the " black households, "the. And stop-loss as a speculative way, the accuracy is not high, but once operational errors, you will be "meat" in a low cut but never picked it back, could have been profitable chips because of The operating loss into a loss. Such examples in the stock market, is around us too much. Based on the author's experiences and lessons stocks, as it is not appropriate to stop three cases of. First, the fundamentals of listed companies no obvious deterioration of the situation, the history of low-cost areas is not suitable to stop the chip. Stop to such chips, often means hand over the profits to send to others. For this stock, an amount Powei down, investors bold cover their short positions. When, as in August 1998, Lanzhou China 100 (600 738), the Unit after the implementation of placements, but also coincided with the index fell, the results fell below the historical low of 7 yuan Department, and for a time to share to 6.30 yuan to fight. But soon pulled up the stock price, and the Unit has embarked on a cattle way from this. Again then Tyurin shares (600,891), also dipped below the historical low of 6 yuan, hit a new low of 5.06 yuan, but quickly pulled the top of a 9 element. If investors in these low cuts off the shares, I'm afraid to regret a lifetime. Second, the way for the rise in stocks is not appropriate to stop the. According to the views of the wave theory, the rise of a complete wave is composed of five waves, which rose by 1,3,5-wave wave, and wave to adjust the wave 2,4. The rise in share price in the process of decline should be regarded as a rising adjustment of the purchase, and if this is the stop-loss, often will throw chips in a relative low, thereby reducing revenue. Like earlier this year, Shanghai Stock Market adjustment to 1893 points, then the decline in many stocks have reached more than 7%, if stop, then it is lost in a low chip over the. Third, the high drop without heavy volume of individual stocks are not fit to hurry to stop. Makers shipments often completed in multiple times, though you quilt, but if immeasurable fall down, then you can wait patiently maker Chi Chou pull up next time out when loosened a bit out of loss or less. Especially for the small cap stocks, or stocks are not particularly large, after a period of consolidation, the dealer will be more likely to pull up stock again. Wujiang River, as the recent Power (0975), in early July, the shares briefly fell 24.40 yuan from 27.30 yuan, or more than 10%, but shares then pulled up again, reaching a new high of 27.90 yuan. If investors stop at 10% of the office, then it is cast in a short-term low chips on the. Of course, those huge gains, heavy volume down the stock, investors must be an early stop for good, in order to avoid making diving shipping, brings you the heavy loss. Loss law effective 1, the fixed stop-loss method This is the easiest way stop, it means the loss is set to a fixed ratio, once the loss is greater than the ratio of the prompt liquidation of positions. It generally applies to two types of investors: first, investors just market; Second, higher risk markets (such as the futures market) investors. Mandatory role of the fixed stops more obvious, investors over-reliance on the market without the judge. Set stop-loss ratio is the key to the fixed stop. The proportion of fixed stop-loss data from the two components: First, investors can bear the greatest losses. The proportion of investors in mind because of financial capability, etc. vary. Also expected the profits with investors. Second, random fluctuations in trading products. This means that no external factors, the market trading group behavior disorder caused by fluctuations in the price. The ratio of the fixed stops in the two data set is where to find a balance. This is a dynamic process, investors should set the percentage based on experience. Once the stop-loss ratio setting, investors can avoid being unnecessary shock out random fluctuations. 2, technical stop-loss method The more complex the technology stop method. It will stop setting combined with technical analysis, excluding the random fluctuations in the market after the key technical bits set in the stop-loss orders, so as to avoid further losses. This approach requires investors to have strong technical analytical skills and self-control. Technology compared to former Stop method on higher investor demand, difficulty of finding a fixed model. In general, the use of technology stop method, nothing more than to bet a large surplus of small losses. For example, increased access to buy the next track, the wait for the end of an upward trend again open, and stop bits set on average in the relatively secure mobile line in the vicinity. On the Shanghai Stock Exchange, the market index on the row, 5-day moving average short-term trend can be maintained, 20 days or 30 days moving average will be maintained in the long-term trend. Once the market began to rise after the 5 days moving average in the intervention of which will stop in 20-day moving average near the stage can enjoy increased market brought most of the profits, but also get out of the head formation in a timely manner to ensure profits . Rising market in the early stages, 5-day moving average and 20 day moving average distance is small, even if the wrong market, the 20-day moving average near the stop loss will not be too much. Again, enter the consolidation phase of the market (disk Bureau), the usually have triangular shape box or convergence, price and medium-term moving average (usually 10-20 antenna) of the deviation rate is gradually reduced. At this point investors maximum deviation rate in the technical office to intervene and stop bits set in the maximum deviation rate of disk Council Office. This low prices, for the difference. Once the price of the medium-term moving average deviation rate of re-amplification, while Italy. At this point, if prices fall into, investors should be bold and leave. City Council is set relatively unilateral purposes. Bureau of the initial site, the market that everyone is worried, shock greater, the transaction can venture into. Plate should be to stop the late Board narrowed the scope of appropriate, enhance the safety factor. 3, unconditionally stop method Regardless of cost, Duo Lu fled the stop is called unconditional stop. When the market has undergone a fundamental turning point in the fundamentals, investors should abandon any illusions, popped up all costs in order to save power, choose the battles. Changes in fundamentals is often difficult to reverse. Fundamentals deteriorate, investors should make a prompt decision, cut out warehouse. In conclusion, stop loss is to control the risk of necessary means, how to make good use of stop-loss tool, investors should own styles. In the transaction, Investor's overall position on the market, the trend is very important to grasp. Multi-stop in the high-priced ring, ring in the low or no less, in the price cycle should be determined as the market is moving. The flow, with a good stop-bit is the only way of winning investors. Four stops to prevent misunderstandings Misunderstanding one: frequent stops, only the more damage the more Most novice first joined the futures market, stop in because they do not suffer losses in time, the general would learn, for strict stop-loss principle. But for a "once bitten, twice shy" mentality, often easily into the other extreme, it is because market transactions are not familiar with and is not self-confidence, did not set the stop loss rules, frequent loss frequent stops. This misunderstanding is enormous harm, no matter how much amount of money, no account can take a long-term losses, even more seriously, when an increasing amount of money is low, investors may be losing the confidence of and transactions, always stop and do not hesitate to stop wandering between, it is difficult to develop and implement a reasonable stop-loss program. To avoid such a situation, investors should any one species in the transaction, first familiar with the market rules and price volatility characteristics, and according to different varieties for different stop loss strategies and stop location. Misunderstandings 2: loss to "drag" to come back Investors in the event of loss, often indecisive, luck, give up the implementation of the stop-loss program, hopes to reverse the delay to wait for the quotes, the loss "delay" to come back. Especially in the huge loss of time, because psychologically unbearable, hopes to reduce the loss rate of delay. This is the most difficult to overcome the Exchange is the most common mental errors. In fact, any transaction has the best time to stop and stop-loss position, if missed, not only can not recover the initial losses, may also lead to huge losses. Especially when the loss occurred contrarian, should act decisively and strictly implement the stop, this is the so-called "not afraid of mistakes, I am afraid that delay." Misunderstanding number three: only a small loss, loss a lot of money Some investors have certain trading experience, tend to overestimate their ability to stop, caught in the stop-loss of "only a small loss, loss a lot of money," the error. For example, when loss of less than 10% of the time to stop in time rational, but when the loss of more than 50% of the time but do not want to stop.
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