Stop Loss Strategies
Place stops intelligently to protect every trade
4 sections · 3 quiz questions · ~5 min read
Guided course path
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Closest track: Options, Risk Math, and PsychologyFirst lesson: What a call option grants you
Why Stop Losses Matter
A stop loss automatically closes your trade at a predetermined loss level. Trading without a stop is like driving without brakes. Every trade must have a stop loss — no exceptions. It defines your risk before you enter.
Where to Place Stops
Place stops at logical levels — below support for longs, above resistance for shorts. Don't use arbitrary pip amounts. Your stop should be at a level where your trade idea is proven wrong. Structure-based stops are superior.
Trailing Stops
A trailing stop moves your stop loss in the direction of your trade as it becomes profitable. This locks in profits while letting winners run. You can trail behind swing lows, moving averages, or use a fixed pip distance.
Common Stop Mistakes
Don't place stops too tight (you'll get stopped out by normal volatility) or too wide (excessive risk). Never move your stop further from price to "give it more room." If you need to widen your stop, reduce your position size.
Quick check
Did it stick?
Try to answer each one before you peek at the explanation.
1
Where should you place a stop loss for a long (buy) trade?
2
It's okay to widen your stop loss if a trade is going against you.
3
Match the stop type to its description:
Fixed Stop→Set once, never moves
Trailing Stop→Follows profitable moves
Structure Stop→Placed at S/R levels