#StopLossStrategies

Stop-losses are your seatbelt in trading—essential for protecting capital and keeping emotions in check. A solid stop-loss strategy lets you limit risk, trade with confidence, and avoid catastrophic losses.

Here’s a rundown of popular stop-loss strategies, when to use them, and some pro tips to keep you sharp:

🛑 Top Stop-Loss Strategies

1. Percentage-Based Stop-Loss

Set your stop-loss at a fixed % from your entry.

🧠 Example: 2% below your entry price.

📌 Best for: Beginners, swing traders, or volatile assets.

🔥 Tip: Combine with position sizing to control risk per trade.

🎯 Rule of thumb: Risk 1-2% of your total capital per trade.

2. ATR-Based Stop-Loss (Volatility Stop)

Uses the Average True Range (ATR) to place stops based on asset volatility.

🧠 Example: Entry at $100, ATR is $2 → stop-loss at $96 (2x ATR).

📌 Best for: Dynamic markets, where fixed % stops get hit too often.

🔥 Tip: Use a 14-day ATR for most setups.

3. Support/Resistance-Based Stop

Set your stop just below support or above resistance zones.

🧠 Example: Buy at $50, support at $48 → stop-loss at $47.80.

📌 Best for: Technical traders using chart patterns or price action.

🔥 Tip: Give it a bit of "breathing room" so normal price noise doesn’t trigger the stop.

4. Moving Average Stop

Use a moving average as a dynamic stop-loss.

🧠 Example: Trailing stop below the 50 EMA on a trend-following trade.

📌 Best for: Trend traders who want to ride moves longer.

🔥 Tip: Works well with 20 EMA (short-term), 50 EMA (mid), or 200 EMA (long-term).

5. Time-Based Stop

Exit after a certain time period if the trade hasn’t moved as expected.

🧠 Example: If price doesn’t break resistance in 3 candles, exit.

📌 Best for: Scalpers, intraday traders, or news-based plays.

🔥 Tip: Useful when market conditions change fast (e.g., during earnings or FOMC).

6. Trailing Stop

Adjusts as price moves in your favor, locking in profits.

🧠 Example: Trailing stop set 5% below the highest price reached.