What is the formula for stopping profits and losses?
2023-06-05
Summary:
Entering the market should follow the principle of taking advantage of the situation, while exiting the market involves the issue of stopping profits and losses. It is recommended that investors engaged in short-term trading consider adopting a semi-automatic trading mode, using automatic trading software with stop profit and stop loss functions for manual buying and mechanical selling.
In the process of financial transactions, there is inevitably a problem of entry and exit. Entering the market should follow the principle of taking advantage of the situation, and exiting the market involves the issue of stopping profits and losses. It is recommended that investors who engage in short-term trading consider adopting a semi-automatic trading mode, manually buying, and mechanically selling through automatic trading software with stop profit and stop loss functions. Buy slowly, need at least three or more reasons, sell quickly, and sell immediately once the price breaks through. Losses should be small, while profits should be large. How to coordinate needs to be adjusted according to individual circumstances.
Stop profit and stop loss is a strategy used to control trading risk, and its formula is as follows:
Stop profit price=entry price+entry price x target return rate
Stop loss price=entry price - entry price x maximum loss rate
Among them, the entry price is the price at which you buy or sell an asset, the target return rate is the profit margin you hope to obtain from the transaction, and the maximum loss rate is the ratio of the maximum loss amount you are willing to bear to the entry price.
For example, if you buy a stock at a price of 100 yuan and set a target return of 10% and a maximum loss rate of 5%, your stop profit price will be 110 yuan (100 yuan x1.1), and your stop loss price will be 95 yuan (100 yuan - (100 yuan x0.05). In this way, if the stock price rises to 110 yuan, you will receive a profit of 10 yuan; If the price drops to 95 yuan, you will lose 5 yuan. By setting a stop loss price, you can limit risk and protect your investment in trading.
【 EBC Platform Risk Reminder and Disclaimer 】: There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice.
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