**In trading, some traders believe that when the order starts to float to profit, the stop loss should be pulled to the cost line as soon as possible. This is done primarily in pursuit of psychological comfort. In ** trading, we face two instinct tests: one is loss aversion, and the other is uncertainty aversion. Loss aversion makes us reluctant to bear the feeling of loss, and uncertainty can also make us feel uneasy because it brings insecurity.
The strategy adopted by most traders is to die after a loss, hoping not to lose, and to settle for it as soon as possible after making a profit, because there is a possibility that the floating profit of the position will disappear. However, some traders have found that this approach is not correct after a period of practice, because there is no positive return from either dead or good harvest. They understand that making ** trades should cut off losses and let profits run.
However, this right way of trading requires embracing losses and uncertainty and is a test of human instinct. In order to balance the level of instinctive comfort with the right trading pattern, some traders resort to raising their stop loss to the cost line. This way can give us a sense of certainty, that is, the feeling that the trade will make more money and less money and will not lose money anyway.
However, this way is not the most perfect, but only one of the feasible ways. Because adjusting the stop-loss line will also change the profit-loss ratio and win rate. For example, when the floating profit reaches its highest point, adjust the stop loss line to the cost line. If the ** falls sharply, stop loss at the cost line, you will get positive feedback, and the order that should have been stopped will be out of the market. However, if ** happens to fall near the cost line and then starts again, the order that could have been held may be "washed" out due to the adjustment of the stop loss line, which will get negative feedback.
Therefore, there are pros and cons to raising the stop line to the cost line, and there is no absolute good or bad. Just like changing the shape of a square, although the shape changes, the area does not change. For a trading system, the addition of this condition only changes the "shape" of the system, but does not touch the fundamentals.
Therefore, it is not necessary to raise the stop loss to the cost line after there is a floating profit, you can choose to increase it or not. This in itself is a matter of trade-offs, depending on what you need. In ** trading, it is necessary to have the ability to look at problems dialectically. Rather than blindly pursuing comfort. Commodity trading