An Analysis to Critical Points of Making Profit through Investment Transaction Behavior without Transaction Costs and the Theoretical Basis of Stop-loss Point Method

The mathematical model of the conditions for making profit through investment products transaction behavior under no transaction costs is developed in the paper, by which the critical points of making profit through the investment products transaction behavior are obtained. They are critical proportion of the times of winning and losing when the winning and losing are at the same scope, the critical proportion of the scopes of winning and losing when the winning and losing times are the same. The model has closed relation to the investor´s successful or failing operation, so it is significant to the choosing of reasonable investment strategy. The research results indicate that the stop-loss point method originating from the investors´ experience has some theoretical basis in such market as stock market and futures market with fluctuating prices.