Operations in the financial speculation, STOPLOSS (stop) is the most common and most popular one of the terms. Stop survive for long periods in the financial speculation of the most important basic skills, but for the loss of the instinct to escape, most of the speculators stop knowledge is confused or even wrong, or are ignorant of the state of knowledge on the stop-loss Mistakes are the greatest.

Misunderstanding one: do not stop

Do not stop Why is wrong?

As long as the operation will have on the wrong. In doing so profitable is a matter of course, wrong, how do? After a mistake in the foreign exchange market, the only option is to admit its mistake and correct errors immediately, while the stop loss is to admit its mistake and correcting mistakes, the principal means. Any transaction should not be seen as a desperate gamble, but the probability of the game in a molecule. Does not perform stop-loss operation, which means unwilling or courage to admit mistakes, subconsciously or that he will not make mistakes, or have left to chance. According to Murphy's Law, "If something is likely to deteriorate, then such a possibility will become a reality," a small mistake will become a big mistake, small losses become big losses, ultimately a very slippery slope .

From another perspective, each investor will not be long life to 500 years old, and used them most of the time waiting for a loss-making position to become profitable; each investor's capital is limited and can not support the unlimited loss potential. In the face of error is not corrected investors, apparently are already doing a "really want to live 500 years" to prepare, have also been dug the way to Fort Knox (United States gold reserves of land) of the tunnel.

Stop-loss may be a new mistake, just might, but does not stop is certainly a mistake. The lesser of two evils, even though most people do not want to have borne the loss, but taking into account the limited time and money to local small losses in exchange for the overall initiative, is clearly a wise move.

Misunderstanding number two: chaos stop

Most of the speculation started his novice, because they do not stop the huge losses suffered after the usually learn to stop as a discipline, which in turn toward the other extreme, plunged into a new Misunderstanding: chaos stop.

Arbitrary stop the consequences are quite obvious, no account can stand the long-term sustainability of the stop-loss. The more the face of the net accounts only thinner, investors often do not stop to return to the old way, and again between the stop and not stop swinging.

Investors to get out of stop-loss and non-stop thinking barriers in order to find the answer to that question. Stop What is the purpose? The purpose is to control the stop-loss risk, but must recognize is this: stop-loss is not the only means to control risk. Speculative maze inside the trap are diverse, and we committed mistakes and is also a variety of risks, and only get to the root, and fundamentally make fewer mistakes, less risk, in order to reduce the number of stop-loss, in order to make each stop is necessary and worthwhile, rather than unnecessary and self-harm.

Misunderstanding number three: sometimes stop and sometimes do not stop

Having recognized the need to stop, but also tasted the bitter fruit of chaos after the stop-loss, investors can go there is a dead end, it is sometimes stops and sometimes does not stop. When the losses in their own time within the acceptable range, for example the case of 30-point loss on the choice of stop-loss, but stop once it is expanded to 100 points, will not stop by. This is actually the size of the loss in accordance with deciding whether to stop, but the correct approach is wrong according to whether they decide whether to stop.

Stop-loss is not a panacea, it is only investment in road safety belts and parachute. Not using seat belts does not mean certain crashes, seat belt may be reduced by more stable investment. Stop-loss is necessary, but only as a means to prepare for the event, to stop the abuse and misuse can only cause harm.

For most investors, the fewer mistakes, lower frequency, small warehouse operation, consistent implementation of the operation of discipline in order to upgrade from the amateur to professional and embarked on a long-term stability and profitability of the Road.