In contract trading, scientifically setting take-profit and stop-loss levels is key to controlling risk and achieving stable returns. A reasonable setup can help traders overcome human greed and fear, thus maintaining rationality in a volatile market. This article will detail several mainstream and practical methods for setting take-profit and stop-loss levels in contracts, helping you build a more complete trading system.
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Understanding the Core Role of Take-Profit and Stop-Loss
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Stop-Loss: Refers to the automatic closing of positions by the system when the market price reaches a preset loss point, aiming to limit losses within a controllable range and avoid larger losses due to drastic market reversals.
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Take-Profit: Refers to the automatic closing of positions by the system when the market price reaches a preset profit point, aiming to lock in existing profits and prevent profit shrinkage or even losses due to market pullbacks.
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Core Value: The essence of take-profit and stop-loss is the embodiment of discipline, effectively eliminating emotional interference and allowing trading decisions to be based on preset strategies rather than impulsive reactions.
Where are the stop-loss points for cryptocurrency contracts? Methods for setting take-profit and stop-loss in the crypto space - PHP Chinese Network
2. Practical Techniques for Setting Stop-Loss Points in Contracts
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Key Support and Resistance Method: This is the most commonly used method in technical analysis. For long positions, set the stop-loss slightly below the key support level; for short positions, set it slightly above the key resistance level. These positions are usually previous highs and lows or areas of high trading volume.
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Fixed Ratio Method: Set a fixed loss ratio based on your risk tolerance, such as 1% or 2% of the total account balance. Immediately stop-loss when the position loss reaches that ratio. This method is straightforward and easy to execute and manage.
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Technical Indicator Method: Use indicators like Moving Averages (MA) and Bollinger Bands (BOLL) as references. For example, in an uptrend, set the stop-loss below the MA20 or MA30 line; if the price effectively breaks below that moving average, it signals a potential trend reversal, and one should exit promptly.
Where are the stop-loss points for cryptocurrency contracts? Methods for setting take-profit and stop-loss in the crypto space - PHP Chinese Network
3. Scientific Methods for Setting Take-Profit Points in Contracts
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Target Resistance and Support Method: Similar to the logic of stop-loss settings, the take-profit point for long positions can be set near the next key resistance level above, as the price may encounter significant selling pressure at that position. Conversely, for short positions, set it near the key support level below.
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Risk-Reward Ratio Method: This is a more strategic approach. Before opening a position, first determine the stop-loss location, then calculate the take-profit point based on the desired risk-reward ratio. For example, set a risk-reward ratio of 1:2 or higher; if the stop-loss space is 5%, the take-profit target should be at least 10%.
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Partial Take-Profit Method: When the market develops favorably, do not close all positions at once. You can first take profit on a portion of the position at the first target level to lock in profits, then move the stop-loss point of the remaining position up to the cost price, allowing profits to continue running for greater potential gains.
Where are the stop-loss points for cryptocurrency contracts? Methods for setting take-profit and stop-loss in the crypto space - PHP Chinese Network
4. Summary and Core Tips
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There is no absolutely perfect standard for setting take-profit and stop-loss; the most suitable method needs to be judged comprehensively based on market conditions, trading cycles, and personal style. Beginner traders can start by imitating and testing to gradually find the model that suits them best.
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The most important point is: strictly execute the plan. Once the take-profit and stop-loss points are set, do not change them arbitrarily due to short-term market noise. Discipline is the fundamental guarantee for surviving in the market in the long term.
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It is recommended to practice sufficiently through a demo account before actual operations, mastering the application scenarios of various methods and cultivating good trading habits.
The above is the detailed content on where the stop-loss points for cryptocurrency contracts are and methods for setting take-profit and stop-loss in the crypto space.