Today, let’s talk about a key point that has been discussed repeatedly but remains practically unattainable for most people — profit-taking and stop-loss. Many people see it merely as a trading tool or entry and exit points, but in my opinion, this is not just a simple operational strategy; it is a constraint, a fundamental discipline that enables one to endure in the market over the long term.

First, let’s talk about stop-loss. I have always compared stop-loss to a brake in trading, equivalent to a kind of insurance for one’s account. Driving without brakes can easily lead to disaster in unexpected situations; similarly, trading without a stop-loss can wipe out all the profits accumulated over several months in a single extreme market event.

Professional operations never consider stop-loss levels on the fly after entering a position. Before opening a position, the exit threshold must be planned in advance. This level cannot be arbitrarily set based on feelings; it must be determined through a comprehensive assessment of market support and resistance,K-line structure while strictly matching one’s financial capacity. The generally accepted prudent standard in the industry is to keep a single loss within 1% to 2% of the total capital; even if faced with consecutive stop-losses, it will not cause irreversible damage to the account.

The worst mistake is to move the stop-loss up manually after the position is in floating loss, relaxing the loss threshold out of hope that the market will soon turn around. By repeatedly allowing losses to expand, one can end up with minor losses becoming major losses, holding the position passively untilliquidation. The market will always present opportunities to start over; only when principal is depleted does one completely lose the qualification to gamble. Preserving capital and surviving comes first, allowing for the infinite possibilities of making money later.

Now let’s talk about profit-taking. While stop-loss tests courage, profit-taking fights against the greed ingrained in human nature, which is the root cause for most people not making big money. From my practical experience, the most useful approach is incremental profit-taking, which locks in realized profits while allowing room to take advantage of market trends. Friends who have been following my operations for a long time should deeply resonate with this.

When the market reaches a critical resistance zone, or when the profit-loss ratio for a position hits preset targets of 1:2 or 1:3, first close half of the position to secure most of the profit. The cost of remaining holdings directly drops to zero, which is equivalent to gambling with the floating profit provided by the market for subsequent movements, creating a much more relaxed mindset.

For the remaining base position, do not rigidly fix stop-loss points. I recommend usingtrailing stop-loss to follow market trends, adjusting protection levels based on moving averages and trend lines. If the market continues to rise, keep holding without subjectively predicting a top; however, as soon as the market shows divergence or breaks key levels signaling a reversal, then completely close the position.

Many people always think they can achieve instant success, fantasizing about infinite market ups after making a small profit, unwilling to realize gains in time. In the end, the market quickly retraces, and on-paper floating profits disappear considerably, leaving them working hard for nothing.

Ultimately, in trading, it’s not about who understands the market better but who can stick to the rules. Strict stop-losses prevent large losses, and flexible profit-taking balances earnings and risks. By embedding these two disciplines into every operation, one can steadily accumulate profits in a highly volatile market.

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