#StopLossStrategies

Stop-Loss Strategies (Quick Guide)

A stop-loss is an order to sell a security at a set price to limit losses or protect gains.

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Key Stop-Loss Types

1. Fixed Stop

Static level below entry (e.g., 10%).

Simple but doesn’t adjust to volatility.

2. Trailing Stop

Moves up as price rises (e.g., 10% below peak).

Protects profits but can trigger on noise.

3. % Stop

Set % drop from entry (e.g., 5%).

Easy to apply but ignores volatility.

4. Volatility-Based Stop

Uses ATR or similar indicators.

Adaptive but needs technical skills.

5. Time-Based Stop

Exit if no move in set time (e.g., 30 days).

Avoids dead trades; may miss late moves.

6. Technical/Fundamental Stops

Based on key levels or major news.

Aligned with broader analysis.

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Best Practices

Automate stops to avoid emotion

Set stops where your trade idea fails

Adjust for volatility

Use partial exits

Be aware of slippage in fast markets

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Pros & Cons

Pros

Limits losses

Enforces discipline

Automates risk control

Cons

Can trigger early

Slippage in fast moves

May ignore context

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Use Cases

Day Traders: Tight % stops

Swing Traders: ATR + chart levels

Investors: Trailing stops to lock in gains

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Bottom Line: Stop-losses help protect capital—choose the right type based on your style, test it, and stay disciplined.