What is a stop-loss and why it matters
A stop-loss is a pre-defined exit level for a losing trade. It protects capital and reduces emotional decision-making.
A stop-loss belongs in the plan
Place a stop where the original scenario no longer makes sense, not merely where a loss feels uncomfortable. Technical levels and acceptable risk must work together.
Do not widen a stop without a plan
Moving a stop farther away after entry changes the original risk. If a wider stop is necessary, reduce the position size instead.
Choose the execution method
A stop-market order prioritizes execution but can fill away from the trigger price. A stop-limit controls price but may not fill during a sharp move.