Many people cannot stop loss in time and manage their positions reasonably, but these two are actually the key to protecting themselves in the market.
Why do we need position control? Why do we need stop loss?
For example, if you can reasonably control your position, such as using only 20% of your funds to deploy a certain sector, even if you make a wrong judgment and stop loss at a loss of 10%, then for the overall account, the loss is only 2%. In this case, your loss is controllable, and the overall impact on the account is not significant, and your mentality can remain stable.
However, if you operate with a full position, or even leverage your life, once the market fluctuates in the opposite direction, the loss may be rapidly magnified. Assuming that the market falls by 20% or 30%, you will lose more than 20% or 30% of your account, and may lose more than half of your principal, and even face the risk of liquidation. In this case, your tolerance rate is zero, and once you make a wrong judgment, the result is a disaster.
The market has never been absolutely accurate, and wrong judgments will occur at any time. Therefore, controlling positions and setting stop losses can not only help you avoid catastrophic losses, but also leave you room for adjustment and counterattack. The practice of full position and leverage is equivalent to giving up the chance of survival in the market.
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