1, A stop loss must be determined before the order size is calculated, i.e. the stop loss distance determines what size of your order is. You must calculate such that when the price stops, you are only allowed to lose x percent of your capital, or a controlled fixed number.

2, A stop loss must be established before you enter a position, when your psychology is firm and clear, not after you have entered the order and become disoriented when emotions begin to emerge. get up. If you have a manual stop loss, when the price reaches the stop loss, exit the position no matter the price.

3, Traders are obliged to accept a stop loss once the price has touched above this level and do not expect that the price will reverse. The longer the losing trade is held, the more difficult it will be to accept it until it is too large, your account has lost too much to recover.


4, A good stop loss must be placed at the point where when the price hits it, the trade is wrong and the idea of the trade is no longer valid. As such, the stop loss can be placed at the top/bottom of the trade setup, or at the previous top/bottom.

5, Make room for the stop loss for the price to move and do not place the stop loss in very obvious positions, for example in the circular number zones.

6, Important support with buy orders and important resistance to selling orders are levels to think about first when placing a stop loss.


7. Moving averages are a good tool for placing stop losses and trailing stops.

8. Trend traders will use new highs or new lows for a fixed number of days to place a stop loss on their positions.

9, Swing traders and trend traders sometimes use the bottom of the entry day's closing price as your stop loss.


10. Some other traders use the percentage of the position value as the stop loss. If their trade falls 3% of their capital, they will escape loss.