Thread by @DoopieCash

#Stoploss 101:

A stop-loss (SL) is an order to buy or sell a specific asset once the asset reaches a certain price. An SL is designed to limit a trader's loss on an open position. Basically, it's a insurance against unexpected loss.

#1

When you take a trade, you take a risk. Acknowledging this means accepting the risk and quantifying it before you enter a trade. Not using an SL, means that you‘re not accepting the risk and thereby increasing it! If you don’t use an SL your whole account will become the SL.

#2

SL Placement:

90% of the retail traders put their SL just below the wick. Well, let me tell you it's actually the worst possible place to set yours. Every bigger player knows that liquidity can be found just below these wicks.

#3

So, now your plan is obvious which will make you vulnerable to players who would like to sweep the liquidity (stop hunts). Think like a big player; Where's the majority placing their SL?

#4

A trader’s SL should be placed at the level at which your trade does not make sense anymore and is proven wrong by the markets. So the placement of the stop loss isn't hard at all. Just remember what you want to protect (your entry!).

#5

Avoid fixed stops because they ignore PA, HECK....they actually ignore any available information out there! Your SL is bound to your entry and your entry is bound to your SL.

A great setup but not a good spot to place a proper SL? Is a bad setup!

#6

Also never move your SL before a TP is hit. it’s there for a reason! If it‘s being triggered, admit that you're wrong, take the feedback, and move on.

#7

Tight or Wide Stops:

Wide stops:
-smaller position size
-less activity
-higher strike rate
-more conservative equity curve

Tight stops:
-larger position size
-more activity
-lower strike rate
-more volatile equity curve

#8

There is no right or wrong, all is based on your own preference and experience as a trader. Play around to find the best possible setup for yourself! Yes, YOU actually have to put in some effort to make this work you lazy bums!

#9

So, if you get stopped a lot you can do 3 things:

Don't change anything

Widden the stop and expect the sweep (this will result in a smaller position size)

Change your entry and keep your SL as tight as possible. Start making profitable #trading decisions (my preference)

#10

No matter how good you are, there will be times where the #markets prove you wrong. Keep learning and practicing!

Better safe than sorry 👋

#11

#investing #stocks #crypto #Bitcoin