"The problem isn't that cutting losses is 'evil'. The issue was the 'place' (where you set them)."

After reading this far,

you might be thinking, "So maybe it’s better not to place a stop loss at all?"

Some readers may feel that way.

But that’s not the case.

A stop loss itself isn’t inherently bad.

The issue is that almost everyone places it in the same spot.

According to the textbooks

・Just beyond the most recent high/low

・An obvious end of a wave

・A place where anyone would say, "If it breaks here, it’s not good"

Too many people put their stop losses there.

The market isn’t random.

There is always a reason for why many participants are in a given place.

And that reason is what drives price movement.

When the price touches that level once,

and after sweeping through many stops,

it reverses as if nothing happened.

Most people will recognize this move.

Here is one important perspective.

It is――

the question, "Why was it necessary to go that far?"

.

In the next discussion,

we will look a little deeper at the true nature of that “necessity.”

? Coming next (Episode 13)

"Prices do not move in the direction they want to go"