Stop Loss
Your stop loss is your exit plan when you’re wrong. It’s not optional.
Stop Loss Types
1. Fixed Stop
Entry: 100
Stop: 95
Fixed: 5 points
Determined by your max risk per trade.
2. Technical Stop
Entry: 100
Stop: Below swing low at 92
Technical: Key level
Determined by market structure.
3. ATR Stop
Entry: 100
ATR: 20 pips
Stop: 100 - (2 × ATR) = 60
Volatility-based: Adapts to conditions
Based on market volatility.
4. Trailing Stop
Entry: 100
Price: 110
Trailing: 10 points below
Stop moves up: 100 (was 95)
Moves with price to lock in profit.
Stop Placement
| Method | Placement | Best For |
|---|---|---|
| Fixed | % of account | Scalping |
| Technical | Below swing low | Swing |
| ATR | Below ATR | Volatile markets |
| Support | Below support | Range trades |
Stop Distance Table
| Volatility | ATR | Suggested Stop |
|---|---|---|
| Low | 20 pips | 20-40 pips |
| Medium | 50 pips | 50-100 pips |
| High | 100 pips | 100-200 pips |
Common Mistakes
1. No Stop
Problem: Not using stop.
Result: Blow account.
Fix: Always use stop.
2. Tight Stop
Problem: Stop too tight.
Result: Stopped out, then price moves.
Fix: Place beyond normal volatility.
3. Moving Stop
Problem: Moving stop to avoid loss.
Result: Larger loss.
Fix: Set before, don’t change.
Key Takeaways
- Always use stop — Non-negotiable
- Place properly — Beyond volatility
- Don’t move — Set and forget
- Technical > arbitrary — Use structure
- Trail winners — Protect profits
Related
drawdown.md >>>
Set your stop. Honor it.