Do not gamble for large profits with small capital.

There was a friend of mine who did something like this—setting no stop-loss, he said that a margin call was his stop-loss line. He would only invest one or two hundred dollars each time, or five hundred dollars, and then if I took a big position and it blew up, it blew up. Does everyone think this trading method is feasible?

I can tell you with certainty that it is not feasible.

Not only is it not feasible, but you will endure the repeated blows and trials of margin calls, and you will become thoroughly disheartened with the market, which will also greatly affect your subsequent trades.

So, where is the importance of a stop-loss line? The importance of a stop-loss line is that we can know when to switch from long to short at the most critical moment, and then quickly get out of our positions at this most critical moment without touching your stop-loss.

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Some people even keep lowering it, lowering it, lowering it, until in the end, I don't want a stop-loss, I delete it, and I just watch and don't believe it, is there such a situation? I believe every trader has said this phrase, I don't believe it won't come back.

Let me tell you a particularly funny saying, the market specializes in curing all kinds of disbelief.

You say my capital is only a little left, about to be margin called, oh, it's called, and then it comes back, isn't it annoying?

So the importance of a stop-loss is to protect our capital in time, which is equivalent to saving ammunition for the next battle. It's not that we must hold it back, I don't believe it, I want the market to listen to me.

"Teacher, you have also said before that history will repeat itself." Yes, history will repeat itself, not only will history repeat itself, but I will also tell you something else.Where does foreign exchange and spot futures differ from stocks?

Stocks can be delisted, companies can falsify financial reports, and then the company can be expelled from the trading market, so your money can vanish, right? But in the foreign exchange and spot markets, futures markets won't be.

No matter how low it goes, it will definitely come back, the country won't go bankrupt, right? A country's currency is backed by the country's credit, and it won't go bankrupt. Crude oil won't go bankrupt, gold won't go bankrupt, and the futures we buy, like soybeans, won't go bankrupt, will they? They will definitely come back.

But have you considered the time frame? It will come back, but the time frame might be unacceptable to you.

For example, the cotton I traded in the futures market some time ago. Due to a sudden temperature drop in the north, cotton production was reduced, and the price of cotton skyrocketed, breaking the previous high. But it took cotton six or seven years to recover from the last drop to the current rise. Can you bear this time frame?

In that case, what you're doing is not trading. Think about what you're doing. Even if you put it in a money market fund, the return wouldn't be so poor, right? What if there's an emergency at home and you need to use the money?

So, holding on to the trend is not trading; it's indulging your human weaknesses. The importance of setting a stop loss is self-evident.

Everyone who trades should know: stop loss, stop loss, stop loss, and stop loss again.

We need to keep our capital like our ammunition ready for the next battle, to earn it back, rather than insisting that I must carry my money back and make the market listen to me.The importance of stop-loss is directly related to the risk of a margin call, as an improper stop-loss could lead to a margin call in a single instance. Your capital can withstand dozens of trials, and your system, once designed with a good risk-reward ratio, can steadily appreciate your capital while maintaining profitability.

However, due to a moment of pique or a random adjustment of the stop-loss, you could pay a heavy price, one that is hard to accept. You've already adjusted your mindset and know what to do next, but a single mistake in stop-loss can shatter all your confidence and your understanding of the market.

So, remember, it's crucial to switch your bullish and bearish thinking in a timely manner. Don't hold on to the notion that "it will definitely bounce back." Eliminate the "I" and "I think" from your vocabulary, as they are great taboos. We must understand that in the market, we are trend followers. Where the market goes, we follow.

My first mentor once told me that a good trader is like a weathercock. At the time, I found this amusing. When the market falls, we go short; when it rises, we go long. I disregard any news or the idea that "I think it will bounce back." Switch immediately.

Perhaps yesterday I was fully bullish on the British pound, but today I'm bearish. This is stop-loss, this is the timely switch in bullish and bearish thinking. Only in this way can you become a trader who can achieve stable profits.

Why do I keep saying that trading is against human nature? Because our expectations for something and the actual results we can achieve are often two different things. It's not that if you think it will reach a certain point, it will definitely do so. I think it will rise to 2.0 later, but it may not.

What do we want? We want to make money from the market as traders, not to make the market obey us and then do this trade to prove our presence to others. "See, I told you it would rise," it has to rise, "I said it would rise by how much," it has to rise by that amount, right? This sense of presence is meaningless. Remember, you need to know what you really want. You want to make money from the market, steadily, not to use this to show off to anyone.

Of course, I know that this sense of presence, this thrill, may come faster than stable profits. But in the end, the result will be that the profits you've gained from these one or two predictions will be multiplied and returned to the market. This is the importance of stop-loss.

Stop-loss must be placed at critical positions. Remember, it must be placed at critical positions, especially for long-term trend traders, try to look at larger time frames and place your stop-loss at key positions, and manage your capital well.

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