Many traders know that stop loss is very important, but very few actually use it correctly. Let's first look at some heart-wrenching data: if the account falls by 10%, you need to earn 11% to recoup investment; if it falls by 50%, you need to earn 100% to turn things around. Conversely, the more you lose, the required rate of return increases exponentially, which is why timely stop loss can save your life.

How to set a stop loss effectively? First, it should be based on your own risk tolerance. A commonly accepted practice in the industry is to set a single stop loss not exceeding 2%-3% of the total account assets. This way, even if you incur consecutive losses, the account can still hold up.

In terms of tools, moving averages, support levels, and resistance levels are all good helpers that can assist you in finding relatively reasonable stop loss points. But the most critical factor is still execution—once you have a plan, you must strictly adhere to it. Don't be swayed by short-term fluctuations, as that will only lead you to be cut down.

Regularly backtest your trading strategies and closely monitor the flow of funds; this is how you can maintain your composure during major fluctuations. While making money is certainly important, controlling losses is the true essence of long-term survival.