Do you know three kinds of wrong money management?

We all know that only by earning more and paying less and getting more and less out can we continue to accumulate wealth and achieve stable profits. However, in trading, most investors earn less, lose more, get in less, and out more, and their wealth continues to shrink. The reason lies in the wrong way of fund management. Guangxi Haidu Investment Development Co., Ltd. reminds you that if the following three wrong fund management methods can be overcome, there is still great hope that the account will gradually become "full".

Small take profit, big stop loss

Everyone knows that account fund = number of profits × average single profit-number of losses × average single loss. If the average single profit is too small and the average single loss is too large, even if the amount of profit is greater than the amount of loss, the result may be a loss.

To make profits, you must do something anti-human-small stop loss, big take profit, that is, "make profits continue to run, and losses are limited to a small range." Generally speaking, we think that the expected profit and loss ratio of 3:1 is more appropriate. In this way, even if your winning rate is only 33%, you can basically not lose.

Weak position when profit, heavy position when loss

If you calculate the operating conditions at a certain stage, there is an equation, that is, account funds = profitable position × profit point-loss position × loss point. Therefore, sometimes although the number of profit points is much greater than the number of loss points, losses will still occur because the position is lighter when it is profitable and heavier when it loses.

Of course, this is the result of work. We don't know in advance which transaction will make money and which will lose money, but even so, we still have to do a good job of fund management to prevent risks. For example, using the pyramid method of increasing positions, the increased position is slightly larger, and then the increased position is gradually reduced, or the newly added position is regarded as a new transaction and a stricter stop loss is set.

The single stop loss set is too small

The reason why investors often stop loss is that the stop loss point is set too small. Since the market is unreasonable volatility most of the time, it only reflects market sentiment and does not effectively reflect the fundamentals, so there will be a lot of so-called "noise" in market volatility. If the stop loss point is set too small, it is easy to appear frequent stop loss, causing traders to exit. When the trend comes, you have been "stopped" and you have no courage to enter the market again.

The second is the problem of the market itself. For example, trending markets are regarded as oscillations, and oscillating markets are regarded as trends. In this way, your frequent stop losses also appear "reasonable". For traders, the only response strategy to avoid this error is to study the technical and basic aspects of the market, and to improve the ability of market research and judgment.