Stop-loss: where to place it and why traders move it
The stop got hit by a wick a couple of ticks deep — and the price went exactly where you thought it would. Or the other way round: you moved the stop “just a little”, and the loss came out one and a half times the plan. Here is where to place a stop so noise doesn't take it out, and why it's so tempting to move it.
The stop is placed by the market, not by money
A common mistake is to put the stop “50 dollars from entry” because you don't want to lose more. The market doesn't care how much you're willing to lose. The stop goes where the trade idea stops being valid: beyond a level, beyond the last low or high, beyond the range boundary.
The amount at risk is controlled by size. The order is:
- on the chart, find the point where the idea is broken — that's the stop;
- decide how much you're willing to lose — say, 1% of the deposit;
- calculate the size: risk ÷ distance to the stop.
The position size calculator will work out the size.
A stop too close and a stop too far
- Too close — inside the price's normal noise. The stop is hit before the market has a chance to show whether the idea is right. It helps to look at the average candle range on your timeframe.
- Too far — the size has to be cut a lot, and the potential profit in R becomes small. A trade whose target is 0.8R from the stop is mathematically hard.
Where exactly: beyond the wick, not on the level
Almost everyone has a stop right below the level — and the price regularly dips there before reversing. So the stop goes not on the level but beyond the last wick, with a buffer comparable to a normal candle range.
A wick took out the stop. The idea was right, but the rest happened without you.
The wick didn't reach the stop. The trade heads for its target.
A wider buffer means a smaller size: the risk in money must stay the same, otherwise the buffer simply increases the loss.
The stop goes beyond the last wick, not on the level “by eye”.
Why stops get moved
The price approaches the stop and a thought appears: “it's about to turn, I'll move it a bit”. It's a normal reaction — you always want to postpone a loss. But every such move turns the planned loss into a bigger one. In the journal it shows up as trades closed worse than the stop: the plan was 1R, the fact 1.6R.
Count how much you lost beyond your planned stops over a month. That sum is the price of the habit, and it's usually unpleasantly large.
The sum of losses beyond stops for a month is the price of the habit of moving the stop.
When moving the stop is fine
Only in one direction — toward profit. Moving to break-even after a predefined move, or trailing behind price structure, is part of the plan. Moving it further from the price to “let the trade breathe” is not.
Stop and leverage
On futures the stop must sit well before the liquidation price. If, at your chosen leverage, liquidation is closer to entry than your stop, the exchange will close the position with the loss of margin, not according to your plan. With a close stop and high leverage, account for both fees and slippage on the exit.
Cheat sheet: the stop before entry
One button adds these points to your pre-entry checklist — it will appear in every trade in the journal.
- The stop is where the idea breaksBeyond a level, an extreme or the range boundary.
- Stop beyond the last wick, not right on the levelEveryone has a stop right below the level.
- The stop is beyond normal noiseCompare the distance with your timeframe's ATR.
- Size calculated from riskWider buffer — smaller size, same risk in money.
- On futures, the stop comes before liquidationOtherwise the exchange closes the position.
- I move the stop only toward profitTo break-even or trailing — by plan.
Keeping it in check
Ordo Trade compares the actual loss with the planned risk of every trade and shows what trades closed worse than the stop cost. R is calculated for trades with a stop, and the exit optimiser based on MFE and MAE shows whether your stop sits inside normal noise.
In short: frequently asked questions
Where should I place a stop-loss?
Where the trade idea stops being valid: beyond a level, beyond the last extreme or the range boundary. The amount at risk is controlled by size, not by the distance to the stop.
Can I move a stop-loss?
Only toward profit — to break-even or trailing by plan. Moving it further from the price increases the loss beyond what was planned.
How are the stop and position size related?
Size = acceptable risk ÷ distance from entry to stop. A distant stop means a smaller size, a close one a bigger size.
