How to Set a Stop Loss Properly

Most traders set their stops where it "hurts" to lose money. Professionals set their stops where the "trade idea is invalidated". There is a massive difference.

Identify Invalidation Points

Find a level where, if price hits it, your reason for being in the trade no longer exists (e.g., below a recent swing low).

Add a "Buffer"

Market noise often triggers tight stops. Always add a small buffer (using ATR or a few pips) to allow for spread and noise.

Common Mistakes to Avoid

/Moving stops further away when losing
/Setting stops based on a fixed dollar amount

The Drawdown Way

Our Risk Calculator helps you determine the exact lot size based on your stop-loss distance.

Use Risk Calculator

Questions & Answers.

Should I ever trade without a stop-loss?

Never. Trading without a stop-loss is like driving without brakes. You might be fine for a while, but eventually, you will crash.

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