Stop Loss

A stop loss is the price that proves the trade wrong, turned into an order so the decision does not have to be remade under pressure. For a long, it sits below the structure that the long depends on. For a short, it sits above. The distance from the entry to the stop is the risk per unit. Position size comes from that distance. A stop that is "mental," not entered, is a plan you can negotiate with, and you will negotiate with it at the worst moment. A stop that is in the market can still slip. It is a limit on intention, not a guaranteed fill.

Place the stop where the setup is invalid, then size the position so the loss at that price, plus a slippage allowance, is an amount you can take without breaking the session's risk cap. Do not place the stop at the amount you feel like losing and then invent a reason. A 10-rupee stop inside a 30-rupee noise range will be hit by ordinary bars. A stop beyond the next major swing may be so far that the correct size is tiny. Both outcomes are information. The first says the entry is early. The second says the location is too vague.

Use a hard stop on every position that can gap against you only after you have reduced size to survive a gap through it. Use the stop as the boundary you do not move farther away. Moving it closer, to lock something in once the trade has gone your way, is allowed if the plan says when. Moving it away is a refusal to take the loss you already bought. If the level changes because the structure changed in a way the plan anticipated, that is a rule. If it changes because the loss is uncomfortable, it is not.

Putting the stop just beyond a round number or an obvious equal low, where the sweep trades, and calling the resulting loss a stop hunt. You chose the cluster. Also using the same point stop on every trade regardless of volatility. And cancelling the stop "just for the news." The news is why the stop has to be smaller in size, not absent.

A stop-market order becomes a market order when triggered and can fill far through the price in a gap or a thin book. A stop-limit order can fail to fill at all and leave you in the position. Know which order your platform sends. Stops also do not protect an options position the way traders expect, because the option price can gap with volatility even if the underlying tags the level and returns. Define the stop on the instrument you actually hold.