Risk and trade management
Where to place your stop loss
The stop loss is the price where your trade idea is proven wrong and you exit with a small, planned loss.
Why it works
Without a stop, one bad trade can erase weeks of work. With the stop in the wrong place, good ideas get stopped out by noise.
How to use it
Place the stop beyond the swing that invalidates the idea (and beyond nearby liquidity), then size the position so it costs 1% or less.
The typical mistake
Choosing the stop by how much money you want to lose instead of where the idea is wrong.
FAQ
What is Stop loss in trading?
The stop loss is the price where your trade idea is proven wrong and you exit with a small, planned loss.
How do you trade Stop loss?
Place the stop beyond the swing that invalidates the idea (and beyond nearby liquidity), then size the position so it costs 1% or less.