Module 6: Risk Management
Stop-Loss Placement
5 min read
Place stops where your trade idea is proven wrong, not at a random number of pips.
Logical stops
Common approaches include placing stops beyond a recent swing high or low, beyond a support or resistance zone, or using a multiple of the Average True Range (ATR) to account for normal volatility.
Stops that are too tight get hit by normal noise; stops that are too wide require tiny position sizes.
Key takeaways
- Stop where the idea is invalid.
- Account for normal volatility.
- Size the trade to fit the stop.
Educational content only, not financial advice. Trading forex and CFDs involves significant risk of loss.