If you study stock, you will often hear the term cut loss. Simply put, Cut Loss means cutting losses by selling shares in a loss position. Cut Loss is carried out by a trader to prevent stock prices from continuing to fall. Instead of shares held down continuously, it is better for the loss in 'cut' (cut) so that trader losses are not too large.
Cut Loss is like capital protection. For many traders (maybe even all traders include me), Cut Loss is a very disliked thing, because if you sell shares, we will certainly be eroded.
Time to chat with fellow traders and lay beginners, I always get a question: "Bung Heze Why does the trader have to cut loss? Not that if left later the shares also go up to yourself?" "Bung Heze, to what extent do I have to cut loss? How do I determine the right cut loss point?"
Actually, I once wrote several posts about cut loss shares. You can read my post about Cut Loss here. Before I answer your question: until the extent of the cut loss tolerance you have to do, it's good to explain the calm stock chart.
The graph is always fluctuantative. There is time to stock up, there is time to stock down. I mean, when the stock graph rises, it is impossible to continue. There is a certain point where the shares will go down for a moment. Conversely, when the stock price falls, there is a point where the stock price rises again.
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Stock graph
No one has purchased stocks and without profit, and no one doesn't want to buy items that are cheap. Every time there is an opportunity, market participants will always take. That is what results in a fluctuating stock chart.
Fluctuating graphics often make traders seem stupid if you have to cut loss. Because it is often when cut loss has been done, the stock price instead goes up. So, if not cut loss, and wait for the stock price to go up, you shouldn't have a loss. Well, you know?
"It means that cut loss doesn't need to do donk heze?" Ask you ... this question is often asked by traders, and traders often experience turmoil due to cut loss. Want to know the most appropriate answer? Please read part II: Where does my stock cut loss tolerance limit? - Part II.
