Last updated
Last updated
Stop losses are an essential risk management tool for limiting potential loss.
Set the based on market conditions and your .
Place stop loss orders immediately upon entering a trade.
Stick to stop loss levels and avoid emotional decisions.
Avoid moving stop loss further from the entry point.
Consider using orders to lock in profit.
Combine Stop Loss orders with proper to protect your capital.
Setting an appropriate Stop Loss level is crucial. If a Stop Loss is placed too close to an entry, normal market volatility may trigger it. If set too far from an entry, significant losses may result. Consider the following when setting Stop Loss levels:
Market Volatility: wide stop losses may prevent triggering stop orders prematurely in volatile markets.
Technical Price Levels: Placing stop losses beyond significant price levels like support, resistance, or key Fibonacci levels may prevent triggering stop orders prematurely or falling prey to stop hunts.
Risk Tolerance: set stop losses to limit potential losses to match your risk tolerance.
Trading Strategy: tight stop losses may suit short-term strategies, whereas wide stops may suit long-term trading.
Position Size: larger positions may require wider stop losses to handle market fluctuations.
Risk-to-Reward Ratio: stops may be set according to a predetermined risk-to-reward ratio.
Macro Trend: when trading with the macro trend, wider stop losses may be beneficial to keep positions open longer. Conversely, when trading against the macro trend tight stop losses may be beneficial.
Risk Tolerance - set stop losses to limit potential losses to match your risk tolerance.
Psychology - Stop Losses help to maintain discipline and avoid emotional decisions.
A Limit Stop order becomes active once the trigger price is reached or exceeded. However, a limit order may not fill if the price changes rapidly or insufficient liquidity exists on the exchange. A limit order guarantees price, not execution.
A Market Stop order becomes active once the trigger price is reached or exceeded. It will fill regardless of price volatility but not necessarily at the trigger price. A market order guarantees execution, not price. When bot trading, traders often pair a Limit Stop on an exchange with a Market Stop triggered by a TradingView alert. The Limit Stop typically fills first, but if volatility or low liquidity prevents this, the Market Stop guarantees execution.
Sets the stop loss amount on a bull trend as a percentage change, number of ticks, or absolute quantity of the asset being traded.
In a macro bull trend, setting a higher Stop Loss [BULL] value may be appropriate to ensure long positions stay open. Conversely, in a macro bear trend, setting a lower value may be appropriate for long positions.
Sets the stop loss amount on a bear trend as a percentage change, number of ticks, or absolute quantity of the asset being traded.
In a macro bear trend, setting a higher Stop Loss [BEAR] value may be appropriate to ensure short positions stay open. Conversely, in a macro bull trend, setting a lower value may be appropriate for short positions.
Activates the Stop Loss function
It is important to consider the maximum account loss if a Stop Loss is triggered. The can determine , and Stop Loss values that align with your risk tolerance.
Stop Loss settings are not represented in backtest data displayed in the . However, the can backtest strategies containing Stop Losses and other risk management elements. See the section for further details.
Setting an appropriate Stop Loss is crucial for proper risk management. See the and sections for important considerations when determining where to place a Stop Loss.
Stop Loss [BULL] settings will be reflected in profitability data displayed in the but not the Pro Trader Calculations Table. Check the section for more details.
Setting an appropriate Stop Loss is crucial for proper risk management. See the and sections for important considerations when determining where to place a Stop Loss.
Stop Loss [BEAR] settings will be reflected in profitability data displayed in the but not the Pro Trader Calculations Table. Check the section for more details.
Stop Loss signals can be automated to execute Limit Stops or Market Stops on an exchange. Each has specific implications. See the section for details.
Stop Losses are an essential risk management tool for limiting loss if price moves in an unfavorable direction after entering a trade.