My Stop-Loss Strategy: Balancing Protection and Flexibility
I use a hybrid approach combining fixed stop-loss orders and trailing stops to manage risk while adapting to market conditions.
1. Fixed Stop-Losses :
- Set at key support/resistance levels (e.g., below a recent swing low for longs) or based on ATR (Average True Range) to account for volatility.
- Risk per trade is always capped at 1–2% of my portfolio—this keeps emotions in check.
2. Trailing Stop-Losses :
- Activated once a trade moves >5% in my favor, locking in profits while giving room for trends to develop.
- I trail using percentage-based increments or moving averages (e.g., 20 EMA) for smoother exits.
