Where to place the stop-loss is more important than whether to set one. Put it too close and you get swept out every day; put it too far and you lose a lot in one go.
【Fixed Percentage Method】For example, if you lose 1%-2% of your capital each time, exit. Simple and brutal—great for beginners.
Build discipline. The downside is that it doesn’t consider structure, and the stop might just end up right where someone else’s stop-loss cluster is.
【Technical Stop-Loss Method】Hang it at the point of structural failure: for a long, place it below the key support; for a short, place it above
the pressure level. The logic is—if this breaks, it means the evidence I relied on was wrong.
Use position sizing to work backward: if the stop-loss distance is large, reduce the position size so that the loss on each trade still stays within the amount of principal.
1%-2%。This is the correct order of “stop-loss determines position sizing.”
【The combo I use most】 Use key technical levels to determine direction and the invalidation point—preserve your position. When you combine the two, you
will find: for trades with a wider stop-loss, your position should naturally be smaller; only trades with a nearer stop-loss can allow a slightly larger position.
Remember: never get the order wrong—set the position size first, then look for the stop-loss. That’s the root cause of why most people lose money.
What do you think? Share your experiences in the comments.