How do you handle a stop-loss in pair trading? 🎯
🔹 A stop-loss is a pre-determined condition to exit a trade when facing a loss.
🔹 In a pair trade, the stop-loss applies to the whole trade, not to just one single leg.
🔹 If you close only one leg, you are left with a standard directional position you didn't plan for.
🔹 Always set your exit rules before entering, as making smart decisions during a drawdown is much harder.
For example: you write down your limit for total loss on the pair in advance. Once reached, both legs close together, so you follow your plan instead of arguing with it.
⚠️ Typical mistake: Closing the losing leg and leaving the second one "for luck," which turns your trade into a random directional gamble.
Do you close both legs simultaneously, and why?
#Futures #CryptoTrading #CryptoEducation #RiskManagement
🔹 A stop-loss is a pre-determined condition to exit a trade when facing a loss.
🔹 In a pair trade, the stop-loss applies to the whole trade, not to just one single leg.
🔹 If you close only one leg, you are left with a standard directional position you didn't plan for.
🔹 Always set your exit rules before entering, as making smart decisions during a drawdown is much harder.
For example: you write down your limit for total loss on the pair in advance. Once reached, both legs close together, so you follow your plan instead of arguing with it.
⚠️ Typical mistake: Closing the losing leg and leaving the second one "for luck," which turns your trade into a random directional gamble.
Do you close both legs simultaneously, and why?
#Futures #CryptoTrading #CryptoEducation #RiskManagement