Stop loss should be meaningful in foreign exchange trading

I want to thank my master for saying six words to me more than a year ago
"Stop loss should be meaningful."
 Six words, more than a year, imperceptibly, moisten things silently.
Sort out my understanding of these six words.
First, opening positions and entering should be meaningful.
Whether it's a stop loss or a subjective stop loss, if a stop loss is set, it means one entry. Lao Tzu once said: "a weapon, an ominous weapon… Must be used as a last resort.". It's the same with trading. One opening means one risk exposure. Not necessarily profitable, not necessarily loss, but the risk exposure must be exposed. Stop loss just adds a limit to risk, risk is still risk. Therefore, to make stop loss meaningful, the premise is that admission must be meaningful.
According to Jason Williams, "most people who trade are not really for profit. They think trading is for profit, but it's more about other things. " Traders need to continuously overcome the tendency of frequent trading. If admission is meaningless, stop loss is meaningless. Aimed at the enemy, each bullet killed an enemy.
How to measure whether admission is meaningful?
It depends on whether it is in line with its own trading system. Take fishing as an example, when to raise the fishing rod? The fish floated and the hand also reflected it. Every fisherman is waiting for this moment. Without these reactions, the fishing rod will not move. Trading is the same, only in line with the signal of the trading system, in order to lift the fishing rod, order admission. This is the first step and the most basic requirement. As for whether the signals of the trading system are too frequent, and whether they can be optimized and omitted, that is the next thing.
In a word, the first step to make a stop loss meaningful is to make the entrance meaningful.
Second, stop loss points should be meaningful.
To set a stop, we sometimes choose the key price of a certain level of K line, sometimes choose the moving average and trend line, sometimes choose a certain value of an index as the trigger point to trigger the stop. Generally speaking, as long as the stop is clear, there are reasons behind the stop.
The reason for stop loss is not equal to the meaning of stop loss.
Many times, there is no point in having a reasonable stop. Here is a clear concept, what is the meaning of stop loss? The purpose of stop loss is to leave the market in time and end the state of risk exposure when the operation of the market is inconsistent with our expectations. With this purpose, the meaning of stop loss is whether it helps to achieve the purpose, that is, whether it will not be dull or allergic.
Sometimes, stop setting is slow. The market trend has told traders that the initial reason is no longer there, the initial consideration is wrong, but the stop loss has not been triggered. This is common among traders who have just firmly implemented the trading system“ "Hold back, wait" is the most common voice in my heart. But in fact, the admission basis at this time has been falsified.
Sometimes, stop loss settings are allergic. In some volatile periods, too small stop loss (often reflected in the small level of K line high and low, short-term moving average, etc.) will be swept away, the position is gone, and the price will continue to run in the predetermined direction. At this time, although traders can tell themselves that "stop loss is wrong and right", but after all, the "direction" is judged correctly, and the fluctuation range of "direction" is not judged correctly, which is still not ideal.
The standard of stop loss moves at both ends of slowness and allergy, which is very harmful to traders. A trader who is not strong enough will linger between "hold back, wait" and "it's right to be wrong". In the end, what he insists on becomes casual, and what he is confident becomes cowardly. This kind of fluctuation will eventually destroy a trader.
It's too hard to persist. Sometimes it's the wrong way. Stop loss should be meaningful. Second, point selection must be meaningful.
Third, stop loss range should be meaningful.
The value of point lies in the right and wrong of qualitative analysis, and the value of range lies in the value of quantitative analysis. In short, the margin of stop loss determines the profit loss ratio.
In the view of professional traders, a wave of market either has a general consideration (related to the target position of 123), or does not set expectations at all and follows the trend. Either way, the stop loss range is inversely proportional to the profit loss ratio.
The profit loss ratio is inversely proportional to the minimum requirement of winning rate.
Therefore, the range of stop loss is directly proportional to the minimum requirement of winning rate.
——The smaller the stop loss, the less important the hit rate. The bigger the stop loss, the higher the winning rate.
Take the trend tracking strategy as an example. The common winning rate of trend tracking strategy is 30% - 50%. It is generally believed that the winning rate of more than 50% is either over optimized or short-term data is not enough for long-term proof. However, if the winning rate is less than 30%, it is difficult to make profits through a reasonable profit loss ratio. As we all know, trend traders should not over filter the admission signal, the gain is not worth the loss. At this time, the stop loss range is very important. If you can successfully reduce the stop loss range, it often means the same amount of risk exposure, you can build a larger position. In fact, this path is indeed a common way for trend traders to improve trading performance.
Thousands of people, thousands of faces, water is impermanent. There is no definite rule for the range of stop loss, and there is no optimal scheme. The big principle can be made clear basically, stop loss should not be too big, too big stop loss injury profit loss ratio, improve the requirements of the winning rate.
Fourth, the mobile stop loss should be meaningful.
Floating profit of position is the highlight of position. How to move the initial stop loss after floating profit is an important issue in position.
There are two key problems to be solved in moving stop loss.
The first is the problem of break even. Do you want to move the stop loss position to break even point after certain conditions are met? If so, when to move? If not, why not move?
The second is to track the problem of profit stop. Is it possible to dynamically ensure the minimum profit (even if it takes the initiative to stop profit) with the development of the market? If so, when to move? If not, why not move?
There is no standard answer to the conclusion of whether to do breakeven treatment and whether to track the stop loss line. But considering this problem is a compulsory course for traders. What kind of strategy to make is mainly related to several factors
It is related to the design idea of trading system. If it is a simple strategy to pursue a large profit loss ratio, such as the A-share "gap is not filled" strategy, the original "turtle" strategy and so on, the requirements in this regard may be relaxed. If it is short-term speculation strategy within the day, the requirements in this regard can be very strict.
It is related to capital preference requirements. It doesn't matter if the fluctuation of its own funds is large enough. The requirements will be wider. External funds, net worth open, this aspect of the constraints should be strict.
It is related to the characteristics of the trader. Each trader has his own characteristics, whether to dynamically adjust the stop loss should be considered in combination with the characteristics of the trader. Each trader should choose his own strategy according to his own characteristics.