Contract trading: Learning to stop-loss is to live longer.
In this market, I have seen too many people fall victim to 'holding on,' especially new entrants. Perhaps in a volatile market, using one or two times leverage to hold on might still allow for a lucky recovery, but once faced with a one-sided market — like Bitcoin soaring from 110,000 to 126,000 — you will realize that the so-called 'holding on' is simply a bottomless pit. By then, what you're entangled in is no longer how much you can earn, but 'how much longer can you hold on.'
A truly mature trader's first question before opening a position is not 'How much can I earn?' but 'How much can I lose?' First, think clearly about how much you are willing to lose on this trade at most — is it 1% of the principal or 2%? Then, based on this bottom line, work backward to determine your stop-loss point. This is the first step in trading and also the most important step.
Stop-loss is not admitting defeat, but leaving yourself a way out. If the direction is wrong, decisively cut losses; if the position is poor, adjust and fight again. This is far wiser than being deeply trapped. After all, cutting losses is just a temporary pain, while holding on might cost you your life.
The most regrettable thing is that many people have turned being stuck in a position into 'value investing.' Spending half a month or half a year seemingly holding on, in reality, they are being held back in their entire trading career by a wrong decision. What you are trapped in is not just funds, but also your attention and opportunities — when a new market arrives, you can only watch helplessly, unable to move.
This is the most unprofitable thing in trading: using the infinite possibilities of the future to pay for past mistakes.
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