In the gold futures market, setting up a stop loss is very important. There are three most important elements in gold futures trading: stop loss, stop loss, stop loss, and stop loss. However, in actual operation, traders often cause huge losses because the stop loss is not scientifically established. . In fact, the usual way to set up a stop-loss position is nothing more than the following three:
First, stop loss after an important support or resistance level is broken. This is the most commonly used mode of operation in actual gold futures operations. The proportion of traders who stop losses at this position is very high. However, a careful analysis of the domestic and foreign gold futures trend chart reveals that there is often a form of a price trend reversal in the gold futures loan market after the resistance or support level is broken. Typical traps and ways to leverage".
Important resistance or support levels for gold futures prices are as follows: dense trading areas where prices stay for a long time; price highs or lows within a long time range; positions provided by trend lines, golden section or moving average systems, etc. . The main reasons for the lack of reliability of these key positions are:
1. Large speculative funds can predict the approximate stop-loss price of traders in the gold futures market. They even deliberately matched a large number of trades at certain price levels, forming the illusion of strong support or resistance, and then used their capital advantage to break through these positions and operate in the opposite direction to make a profit after the stop-loss order appeared.
2. The support or resistance positions provided by trend lines, moving average systems, golden section levels, etc., are inherently subjective, lacking a reliable basis and foundation, and have low accuracy.
Second, stop loss after the absolute amount of loss is reached. This is also the stop loss method used by many gold futures traders. The main point of the operation is that the maximum loss of funds for establishing an entry position is generally 5% to 20% of the funds occupied, or it can be the absolute amount of funds occupied, such as 100 yuan per lot. Once the loss limit is reached, immediately stop the loss and leave the market no matter what the price is.
When using this stop loss method, you must pay attention to the following two points:
1. Different stop-loss limits should be used for different operating time periods.
2. The established stop-loss limit must be verified by probability in the gold futures market.
The advantages of this stop-loss method are obvious:
1.It highlights the principle of fund management in Huang Na futures trading. Foreign experience shows that good gold futures traders do not lie in analyzing the gold futures market but in managing their funds.
2.It has the advantage of probability; the longer the operation time, the more obvious the advantage.
2.The stop loss position is far from ordinary gold futures traders, which prevents the market risk brought by the first stop-loss position setting. When using this stop loss method, you need to do a lot of statistical and analytical work, determine the trading strategy, and find the best stop loss amount that suits your trading style.
Third, stop loss after the limit of self-tolerance is reached. This type of stop-loss method is a method often used by beginners. The use of this stop loss method in short-term operations is still helpful to increase the rate of return. In fact, some excellent foreign gold futures traders often use this method. The specific method of use is: when a trader's position has a loss, he can hold it as long as he can bear it. Otherwise, he will immediately stop the loss, even if it is a newly established position. This method is suitable for intraday short-term electronic trading, and it is also suitable for gold futures traders who have extensive experience in the market. Novices are often shaken out at high and low levels when using them.
The main basis for using this method is that when a gold futures trader “feels” uncomfortable after establishing a position, it is often because there is something unexpected in the market. However, it may be due to short-term trading. Traders do not have time to analyze too much information, or it may be due to other reasons that you do not know temporarily, but long-term trading makes traders "feel" the risks in the market. At this time, traders should leave the market and wait and see immediately. From a big point of view, there are two types of stop-loss methods: The first type is regular stop loss. That is when the reasons and conditions for buying or holding disappear; even if it is at a loss, the position must be closed immediately. The formal stop loss method is completely determined based on the reasons and conditions of the original purchase. Since each purchase's reasons and conditions are very different, the formal stop loss method cannot be generalized. The second category is auxiliary stop loss. There are various methods here, and they are also a topic that many people often talk about. Here, I will use a certain amount of space to introduce as much as possible the various common auxiliary stop loss methods for gold futures trading.
The first is the maximum loss method. This is the simplest way to stop loss when the floating loss of buying a gold futures contract reaches a certain percentage point to stop loss. This percentage point is determined by the trader's risk appetite, trading strategy, and operating cycle. Once it is set, it cannot be changed easily and must be executed resolutely. The second is the retracement stop loss. This method is actually more often used to take a win.
The third type is a sideways stop loss. Set a stop-loss target when the price is sideways within a certain range after the purchase. The sideways stop loss is generally used simultaneously as the maximum loss method to control the risk fully.
The fourth is the expected R multiplier stop loss. The R multiplier is the return divided by the initial risk. For example, if the actual profit of a transaction is 25%, and the initial risk is assumed to be 5% according to the maximum loss, then the R multiplier of this transaction is 5. We are now going to apply its concept in reverse. First, we will calculate an expected return, then set an expected R multiplier, and divide the expected return by the expected R multiplier. The result is the stop-loss target. Regarding the determination of the expected return, if you are a system trader, you can use the average return per transaction tested by your system history (note that it is not the average annual return); if you are not a system trader, you can use experience Determine the expected return of this transaction. The expected R multiplier is generally recommended to be 2.7~3.4.
The fifth type is the moving average stop loss. Short-term, mid-term, and long-term investors can use MA5, MA20, and MA120 moving averages as stop-loss points, respectively. In addition, the stop loss effect of EMA and SMA moving averages is generally better than that of MA. MACD red bars start to fall can also be used as a good stop-loss point.
The sixth is the cost of moving average stop loss. Cost averages consider the volume factor more than moving averages, and overall the effect is generally better. The specific method is basically the same as the moving average. However, it should be reminded that the moving average is always a lagging indicator, and you should not expect too much from it. In addition, during the consolidation phase, you have to be prepared to endure a large number of false signals from the moving average.
The seventh is the Bollinger channel stop loss. In an uptrend, you can use the Bollinger Bands midline as the stop loss point, or you can use the Bollinger Bandwidth reduction as the stop loss point. In a downtrend, the stop loss for shorting is the opposite.
The eighth type is volatility stop loss. This method is more complicated and is often used by gold futures experts. For example, use the Bollinger Band of the average price range or the moving average of the upside strength as the stop loss target.
The ninth type is the K-line combination stop loss.
The tenth is the stop loss of the K-line pattern.
The eleventh is the stop loss of resistance support.
The twelfth kind is Gann line stop loss.
The thirteenth type is the key psychological price stop loss.
The fourteenth is the stop loss in the chip-intensive area.
The fifteenth type is SAR (parabolic) stop loss. SAR is a good stop-loss indicator in an uptrend, especially when popular stocks that have accumulated a certain amount of gains enter the final crazy acceleration. However, during the consolidation phase, SAR basically fails, and the consolidation phase generally accounts for more than half of the market's operating time.
The sixteenth is the fundamental stop loss.
The seventeenth type is TWR (Pagoda Line) stop loss.
The eighteenth kind is CDP (contrarian operation) stop loss.
The nineteenth is a sudden stop loss. Sudden changes are sudden and large changes in prices. For stop-loss, it is mainly to prevent gaps at the opening and diving at the end. Most of the sudden changes are caused by major external factors, such as the "9.11" incident, major policy changes, and so on.
The auxiliary stop loss methods are far more than those mentioned above, and the above list is for reference only. According to your own operating style and the specific circumstances of each operation, the most important thing is to establish and use your own stop loss method proficiently. Therefore, it is recommended that it is best to master some auxiliary stop loss methods, both for selection and optimization and comprehensive use.
Before buying, gold futures traders should first set a stop loss point or stop loss plan and treat this work as a necessary decision-making procedure or operational discipline. Traders set a stop loss point in advance; they will be calmer and less impatient, thereby reducing the generation of wrong decisions. Strictly speaking, stop loss actually belongs to the content of fund management, and a clear and complete fund management plan is a higher level than stop-loss alone.
Stop-loss is a powerful means to control the expansion of losses in the gold futures market. In the specific implementation process, it should be noted that: you must not wait until the loss has occurred before considering what standard stop loss to use. This is often too late. When buying, you must consider how to deal with a mistake in judgment and formulate a thorough stop-loss plan and stop-loss standard. Only in this way can you be prepared.