Stop Loss Placement
Where and how to place stop losses to limit losses without being stopped out too early.
Last reviewed: 2026-03-06
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Overview
A stop loss is an order that closes your trade at a set price to limit losses. Placement is an art: too tight and you get stopped out by normal noise; too wide and you risk too much. Use structure—support/resistance, swing points—to place stops logically.
Placement Methods
1) Below swing low (long) or above swing high (short). 2) Beyond the entry candle's high/low. 3) ATR-based: 1-2x ATR from entry. 4) Percentage-based: e.g. 1% of account. Structure-based stops often work best.
Common Mistakes
Placing stops at round numbers where others cluster. Moving stops to breakeven too early. Removing stops because you 'know' price will reverse. Never trade without a stop.
Knowledge check
1 of 3Which stop loss placement method often works best?
FAQ
Common questions about this topic.
Should I use a fixed pip stop or structure-based?
Structure-based is usually better—it adapts to each trade. Fixed pip can work for consistent strategies.
What is a trailing stop?
A stop that moves with price to lock in profits. E.g. move stop to breakeven when trade is 1R in profit.
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