Many traders only focus on how to enter the market but overlook the most critical point—the exit strategy. Whether it's stopping losses or locking in profits, the market exit strategy determines whether you can truly make money in the market.

Historically, successful investors have mastered this principle. Rather than saying trading is a skill, it's more about risk management—and setting stop-losses is at the core of this system.

When you set a stop-loss, you're essentially defining the maximum loss you're willing to accept, known in the industry as the initial risk R. Interestingly, after enough trades, you'll find that the average loss is often only about half of R. What does this mean? If R is set small enough, you have the chance to achieve significant gains in certain trades.

But there's a balance point: setting too small a stop-loss can indeed increase the frequency of losses, which reduces the strategy's win rate. Therefore, in practical operations, the stop-loss should be placed above market noise. A reliable approach is to backtest the maximum adverse deviation of all profitable trades and set the stop-loss based on this benchmark.

Common stop-loss methods on the market include fixed amount stop-loss, percentage retracement stop-loss, volatility-based dynamic stop-loss, standard deviation stop-loss, moving average stop-loss, and even support and resistance level stop-loss. Each method has its advantages and disadvantages; the key is to find the one that suits your trading system.

Once you master these, you truly lay the foundation for wealth accumulation.