Violating stop losses is like alcoholism.
There are 3 basic ways to set stop losses in trading:
1. Price-Based Stop
This can be a fixed monetary or percentage loss.
This is the most common and comfortable method — trading becomes a game with predictable outcomes. Knowing your maximum risk keeps emotions in check.
How to choose the price level?
Set a loss limit you're comfortable with — for example, 1% for a short-term trade or up to 12% for an investment position.
I don’t recommend anything over 15% — that usually signals a bad position that starts draining your energy and dominates your thoughts: “When will this finally recover?!”
Alternatively, use a support/resistance level, previous high/low — but don’t place the stop exactly on the level. Put it slightly above/below (e.g. 0.5%) and make sure the potential loss is still acceptable.
Or base it on volatility — for example, the Volatility Stop indicator on TradingView. Again, place your stop slightly beyond the indicated level.
Avoid setting stops based on moving averages — they’re trend indicators, not stop-loss tools.
2. Indicator-Based Stop
Used when a price breaks a key technical level or indicator signal — useful in trend or pattern-based strategies.
3. Time-Based Stop
Often used around news events or major announcements. The market needs time to digest the info, so a time stop lets you exit if the move doesn’t happen within a set timeframe.
❗️Match your stop-loss to the timeframe of your entry❗️
If you entered based on the daily chart — use daily levels, volatility, and context for your stop. Don’t mix timeframes.
There are 3 basic ways to set stop losses in trading:
1. Price-Based Stop
This can be a fixed monetary or percentage loss.
This is the most common and comfortable method — trading becomes a game with predictable outcomes. Knowing your maximum risk keeps emotions in check.
How to choose the price level?
Set a loss limit you're comfortable with — for example, 1% for a short-term trade or up to 12% for an investment position.
I don’t recommend anything over 15% — that usually signals a bad position that starts draining your energy and dominates your thoughts: “When will this finally recover?!”
Alternatively, use a support/resistance level, previous high/low — but don’t place the stop exactly on the level. Put it slightly above/below (e.g. 0.5%) and make sure the potential loss is still acceptable.
Or base it on volatility — for example, the Volatility Stop indicator on TradingView. Again, place your stop slightly beyond the indicated level.
Avoid setting stops based on moving averages — they’re trend indicators, not stop-loss tools.
2. Indicator-Based Stop
Used when a price breaks a key technical level or indicator signal — useful in trend or pattern-based strategies.
3. Time-Based Stop
Often used around news events or major announcements. The market needs time to digest the info, so a time stop lets you exit if the move doesn’t happen within a set timeframe.
❗️Match your stop-loss to the timeframe of your entry❗️
If you entered based on the daily chart — use daily levels, volatility, and context for your stop. Don’t mix timeframes.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.