Female Mandarin Version

Fans left a message: "I can predict that the volatile trend has reversed, but I am still worried about how to close the position?

Friends who are struggling in the trading circle will inevitably feel like listening to empty talk when they see "predicting the trend and closing positions". Indeed, everyone wants to accurately predict the market, but the reality is that the market is changing rapidly and no one can be a "prophet." But don't be discouraged! Even if we cannot accurately predict the trend, we can still rely on scientific strategies and methods to be clear in the closing process, reduce losses and lock in profits. Today, let’s talk about practical skills that can also be done well in closing positions without relying on “predicting the future”!

1. Why do you always think that "closing a position guide" is like nonsense?

Many people think that the closing method mentioned in trading articles is useless because these methods are often based on "judging the market in advance", but the market does not give us the super power of "premonition of the future". For example, articles often say that "the trend reversal is closed", but the question is, how does it count as a reversal? By the time we see it, the market may have gone a long way, profits are being taken off, and even losses are starting to begin.

In fact, this is not because there is a problem with the method itself, but because there are misunderstandings in our understanding of trading. Trading is not a "prediction game", but a "probability game". What we need to do is not pursue 100% accurate predictions, but develop a strategy that can help us reduce risks and achieve profitability in most cases. Just like driving, we cannot predict whether there will be traffic jams or accidents on the road, but we can fasten our seat belts, plan our routes, abide by traffic rules, and reach our destination as safely as possible.

2. These closing strategies are the real kung fu without predicting.

1. Mechanical stop loss and take profit method: install a "safety valve" on yourself

Many people do not set stop loss and stop profit when doing transactions, thinking that this will limit profits, or they cannot bear to "cut their losses". But this is precisely the root cause of the expansion of losses. Stop loss and take profits are like putting a lock on the trading account, helping us control risks and lock in profits.

Stop loss: The setting of stop loss cannot be based on feelings, but must be based on basis. Common methods include fixed-amount stop loss, such as losing up to 2% of the principal per transaction; you can also refer to the key support resistance level, such as when going long, set the stop loss below the nearest support level. For example, if you buy a certain steel stock, the stock price has obvious support around 5 yuan, so you can set the stop loss at 4.9 yuan. Once the stock price falls below this position, no matter how uncomfortable it feels, you must leave the market decisively.

Take profit: There are many ways to take profit. It is relatively simple to take profits in a fixed proportion, such as closing the position if you make a profit of 10% - 20%; tracking take profits is more suitable for trend markets. For example, if you buy a stock at 10 yuan, set the tracking stop-profit range to 5%. When the stock price rises to 11 yuan and the profit reaches 10%, the stop-loss level will then move up to 10.45 yuan (95% of 11 yuan). If the stock price continues to rise to 12 yuan, the stop loss will move up to 11.4 yuan (95% of 12 yuan). Once the stock price falls and hits the stop loss level, close the position and lock in profits. This will not only allow profits to run, but also prevent profits from being taken off significantly.

2. Moving average assist method: Follow the "big force" and it is safer to go

Moving averages are a common tool for judging trends and are also a good helper for closing positions. Simply put, when the stock price is running above the moving average, it means it is in an upward trend and can continue to hold it; when the stock price falls below the moving average, it may mean that the trend is reversed, and it is time to consider closing the position.

Moving averages in different periods have different functions. Short-term moving averages (such as 5-day and 10-day lines) are suitable for short-term trading, with sensitive response but prone to false signals; long-term moving averages (such as 30-day and 60-day lines) are more stable and suitable for judging medium- and long-term trends. For example, if you do short-term trading, the stock price is always above the 5-day moving average, and you can continue to hold it; once it falls below the 5-day line and does not recover the next day, close the position and leave the market.

3. Trading volume analysis method: The volume-price relationship hides the closing code

Trading volume is the "thermometer" of market sentiment. By analyzing the relationship between volume and price, we can find the opportunity to close our position.

• Volume-price divergence: When the stock price continues to hit a new high, but the trading volume is getting smaller and smaller, this is the "top divergence", which means that the upward momentum is insufficient and it may fall. It is time to close the position. On the contrary, the stock price continues to hit a low, but the trading volume gradually shrinks, and a "bottom divergence" appears, which may be a bottom signal. Those who short sell can consider closing their positions.

• Sky-high price: When the stock price rises, a huge trading volume suddenly releases, and the stock price hits a new high that day, this is often a signal of peaking. Be vigilant and close the position in time to lock in profits.

3. Solve the problem of trading mentality: Don’t let emotions ruin your strategy

Many times, we lose not in strategy, but in mentality. Greed makes us miss the opportunity to stop profit, and fear makes us dare not stop loss, and the result becomes deeper and deeper. To close positions well, you must learn to control your emotions.

1. Make plans before transactions and strictly implement them

Before opening a position, determine the stop loss and take profit, position size, trading target, etc. and write a trading plan. When trading, strictly follow the plan and not be affected by short-term fluctuations in the market. Just like running, plan your route and goals before departure. No matter how tired or the scenery is, you must move towards the finish line.

2. Learn to accept losses and treat them as part of the transaction

No one can guarantee that every transaction will make money, and losses are inevitable in transactions. What we need to do is to keep the losses within a reasonable range, rather than be afraid of losses. Every loss is an opportunity to learn. When reviewing the price, you can avoid the same mistake next time.

3. Keep a calm mind and not be influenced by the market

When trading, don’t always focus on the account’s profit and loss figures, and don’t be affected by the market’s rise and fall. Treat transactions as a long-term career and focus on the overall transaction results, rather than the gains and losses of a certain transaction. Just like farmers farming, they will not give up because it rains or droughts one day, but will wait patiently for the harvest season.

It is normal to not be predicted in trading, and this is not an excuse for us to not close our positions well. Through scientific stop loss and profit strategies, effective technical analysis methods, and a good trading mentality, we can move forward steadily in the trading market even without the ability to "predict the future". Stop complaining about the "correct nonsense", take action and apply these practical strategies to actual combat. I believe you will find that closing positions is no longer a difficult problem! Welcome to share your trading stories and experiences in the comment section. Let’s avoid detours on the trading road and make more money!