Stop should size up the situation Money Tips

Category: Money Tips Date: 2006-03-06

Stop should size up the situation

In the context of the market fell sharply, many investors tend to think of the benefits of stop-loss, regret did not use the "safe parachute." But I think that, under these circumstances not of sorrow and self-pity for the blind use of stop-loss strategy in the future, for stop-loss of this tool, we should be understanding of a sober, objective, sensible use of them.

We all know the benefits of insurance, buy insurance, you can be protected when the accident occurred, but life did not appear that everyone buy insurance, do not buy all the insurance, which is the result of rational thinking of millions of people . Because there is no free dinner, insurance is not free, and stop-loss and no. We are according to the actual situation of individuals and families to determine what we need policies, we have according to market characteristics and trends Quotes at different stages of the decision whether to use stop-loss strategy, as well as how to set stop-loss point position. Only in this way can we effectively protect the funds, rather than for investment coupled with a cumbersome.

I think that the market can basically be divided into two categories, namely unilateral City and shocks City. Unilateral City is showing a clear trend of stock index volatility characteristics, using average system can be a good way to identify this trend. The shocks tend to appear in the Quote of the city at the bottom of the head and the middle of the short-term order, moving average crossover system, showing repeated several times. In general, unilateral city the best investment strategy is to advantage of the opportunity to. To do more than the current mechanism, for example, occurs when the Quotes unilateral falling, not to invest in order to avoid stop-loss is the best strategy. But when we believe that decline coming to an end and the involvement of a bear market rebound, and take a rigorous, to a lesser extent of the stop-loss strategy is essential. City in shock should be an appropriate stop-loss rate of expansion in order to reduce the frequency of price fluctuations due to high transaction costs.

Historical data show that China's capital markets more volatile time for the city are more unilateral, and the prices at the bottom and the middle of finishing for relatively short periods, while the head is often present complex forms. Therefore, measures must also be taken to stop the characteristics and Quotes Quotes with different stages of development to implement. To do more than the current trading mechanism, for example, the stock experienced a rise in a long time, we found a short time high stock consolidation, then no matter the current position is in Quotes waist or head, to take strict and only a minor damage measure is very necessary. If the stock price into the bear market, stock index at a certain location a short stay there, you also need to adopt strict measures to stop. But when the stock appears repeatedly see-saw, moving average crossover system has many times, we should use a more relaxed stop-loss strategy. In this market may be bottoming, stocks will likely Lun Zhang, then patience and hold, to be put up and become better on the strategy.

In short, we do more in terms of, after a long long short short up or drop the case, we need to use a strict stop-loss strategy. In the experience of a long bear market, or short-term bull market situation, we should use loose stop-loss strategy. Stop must size up the situation before they are reflected in its efficacy. (Shanghai Securities Research and Development Center Zhu) ��Selected contributions from Shanghai Ren-fu: broad market and individual stocks run either up or down, once the formation of a trend in the short term difficult to change. So, when the broader market fell and the status of individual stocks and is expected to decline will continue for hours, determined to stop in time, watch out in order to avoid disaster, this is also a search for self-protection in the face of adversity, in the passive in the search for active operation strategy.

Changchun Liu Sheng Tianjin: stop to get rid of mindset. In a recent Quotes

, I have friends around a lot of investors think that tape to the launching of B waves, but also rose to 1830 points, a lot of people think that the policy at the end of 1514 is certainly not broken, and therefore adopted a quilt is not moving, waiting for some sort of relief practice. With such a fixed-brain thinking, no amount of stop-loss principle is also consigned to oblivion.