Stock investment requires theoretical support, with commonly used theories including the Wave Theory, Dow Theory, and of course the Contrary Theory. Today, we will introduce profit-making techniques in contrary trends, hoping to help the majority of investors. Let's learn together below~

Under unfavorable stock market conditions, how should investors protect their capital? Some investors may say "locking positions." So, what is locking positions? Locking positions refers to when, after placing an order, unfavorable market conditions arise for the held position. Investors then open a new position in the opposite direction to optimize their holdings amid unclear market outlook during the session, reducing risk and protecting their interests at minimal cost.

Locking positions generally comes in two forms: profit locking and loss locking. Profit locking occurs when investors have floating profits on futures contracts. If they believe the overall trend remains unchanged but anticipate a temporary market pullback, they open a new opposite position while maintaining the original one to avoid premature liquidation. Loss locking happens when investors have floating losses on contracts. Even if they are unclear about the market outlook, they open a new opposite position while keeping the original one to prevent floating losses from becoming realized losses.

After understanding the meaning and types of locking positions, let’s explain why investors use this strategy. There are four main reasons: First, after trading, they cannot predict future market movements, and locking positions buys time for analysis and provides a buffer. Second, they made a trading error despite having a market judgment and hope to correct it through locking positions. Third, they correctly judged the market and executed the right trade but aim to lock in more profits. Fourth, after incurring losses, they refuse to cut losses and instead lock positions to prevent further losses.