Cut Loss means we are close to losing positions because prices move opposite to avoid greater losses.
CASE EXAMPLE
Mr. X predict prices will rise from 1.2000 to 1.3000
So to get the benefits he decided to buy (Buy) is now at 1.2000 price in the hope prices will rise so he could sell with higher price / cost and a profit margin.
But it is not rising prices, contrary to 1.1700 DOWN!
And after repeated analysis, Mr. X concluded that the most likely prices will fall even further, resulting in greater losses again.
So what should she do?
Rather than suffer a greater loss anymore, so Mr. X decided to close the position (liquidate) - well this is called cut loss
This action resulted in a loss of 300 points.
Tips for you:
CUT LOSS do if after repeated analysis, the price will continue to move against your position
If it turns out your decision in doing CUT LOSS TRUE, means you have to prevent yourself from bigger losses
If it turns out your decision in doing CUT ANY LOSS, means you have to prevent yourself in terms of reducing the current losses (or even reach the profit). This means that prices will move toward your initial expectations.
Are you a trader who FAILED when doing CUT LOSS?
If you answered yes, you are WRONG large. Please consider the following:
"Merrill Lynch & Co.., The third-biggest U.S. securities firm, reported a wider-than-forecast quarterly loss as the credit Contraction saddled the company with $ 9.7 billion of writedowns .." (Merrill Lynch & Co.., Third-largest securities firm in the U.S. reported their losses greater than predicted for $ 9.7 billion). Source: Bloomberg
Actually what is the basis, why companies like Merrill Lynch & Co. also announced CUT LOSS even number in detail?
This is because there is still another TRADING SESSION. Not a problem at Merrill Lynch & Co. loses $ 9.7 billion dollars because of their party still see a brighter tomorrow. Their profit opportunities in the future analysis can be larger than the current losses. There's another time so you can achieve the profit is much greater. Releasing the analysis that one 1 / wrong is highly recommended to perform better trading in the days to come.
CASE EXAMPLE
Mr. X predict prices will rise from 1.2000 to 1.3000
So to get the benefits he decided to buy (Buy) is now at 1.2000 price in the hope prices will rise so he could sell with higher price / cost and a profit margin.
But it is not rising prices, contrary to 1.1700 DOWN!
And after repeated analysis, Mr. X concluded that the most likely prices will fall even further, resulting in greater losses again.
So what should she do?
Rather than suffer a greater loss anymore, so Mr. X decided to close the position (liquidate) - well this is called cut loss
This action resulted in a loss of 300 points.
Tips for you:
CUT LOSS do if after repeated analysis, the price will continue to move against your position
If it turns out your decision in doing CUT LOSS TRUE, means you have to prevent yourself from bigger losses
If it turns out your decision in doing CUT ANY LOSS, means you have to prevent yourself in terms of reducing the current losses (or even reach the profit). This means that prices will move toward your initial expectations.
Are you a trader who FAILED when doing CUT LOSS?
If you answered yes, you are WRONG large. Please consider the following:
"Merrill Lynch & Co.., The third-biggest U.S. securities firm, reported a wider-than-forecast quarterly loss as the credit Contraction saddled the company with $ 9.7 billion of writedowns .." (Merrill Lynch & Co.., Third-largest securities firm in the U.S. reported their losses greater than predicted for $ 9.7 billion). Source: Bloomberg
Actually what is the basis, why companies like Merrill Lynch & Co. also announced CUT LOSS even number in detail?
This is because there is still another TRADING SESSION. Not a problem at Merrill Lynch & Co. loses $ 9.7 billion dollars because of their party still see a brighter tomorrow. Their profit opportunities in the future analysis can be larger than the current losses. There's another time so you can achieve the profit is much greater. Releasing the analysis that one 1 / wrong is highly recommended to perform better trading in the days to come.
