📘 What is a stop-loss?
A stop-loss is an order that closes your trade automatically at a price you choose in advance. It is the point where you say: "My idea was wrong, I'm out."
Most traders know they need one. The hard part is WHERE to put it. Too tight and normal noise kicks you out. Too wide (or none at all) and one bad candle eats a week of gains.
📊 Live chart in the cover and in the image post below.
🔍 How to find the right spot
• Start with the reason for the trade. Bought at support? The idea is wrong if price breaks clearly below that support
• Find the swing low (for a long) or swing high (for a short) that protects that idea
• Look at the wicks, not only the candle bodies. The lowest wick is the real floor
• Add a small buffer below it. Round numbers and obvious lows attract stop orders, and price often dips just past them
• Check the normal swing size. If an average 4H candle moves $1,000, a $200 stop is just noise
📈 How traders use it
• Entry: near the level that gives a clear "wrong" point close by
• Stop-loss: just past the swing low/high + buffer, decided BEFORE entering
• Position size: pick the stop first, then size the trade so hitting it costs only 1-2% of the account
• Target: at least 2x the distance to the stop (more on this in a later lesson)
• Never move a stop further away once the trade is open. Moving it closer to lock in profit is fine
🧪 Live example: $BTC right now
• Hack night showed why stops matter: BTC fell from $81,971 (Oct 29, 16:00 UTC) to $76,500 (Oct 30) in under 12 hours, -6.7%. A 10x long with no stop lost about two-thirds of its margin
• Then a textbook stop sweep: the Oct 30 low of $76,500 was the "obvious" stop spot. Later that day a wick dipped to $76,326, just $174 lower, and price bounced. It hasn't traded lower since
• Today BTC sits near $77.9K, stuck in a tight $77.1K-$77.9K box since Saturday. The average 4H candle range over the last two days is about $990
• Example long here: the idea fails if BTC breaks the $76,326 floor. A sensible stop sits below the wick with a buffer, around $75,900 (about 2.5% risk)
• Sizing: with a $1,000 account risking 1% ($10), the position would be about $400, not $1,000
⚠️ Common mistakes
• Stops exactly on round numbers or exactly at the last low, where everyone else's stop is
• Choosing the stop by "how much I'm willing to lose" instead of by the chart
• Using a tight stop with big leverage, then getting wicked out before the real move
• Moving the stop lower when price gets close, hoping it turns
✅ Quick checklist
• Write down where the trade idea is wrong
• Place the stop past that level, below the wick, plus a buffer
• Compare the stop distance to the normal candle size
• Size the position so the stop costs 1-2%
• Set it right after entering, and don't widen it
💬 Where do you usually put your stop: tight or wide? Ever been wicked out right before the move? 👇
Not financial advice. DYOR.