Stop Loss Guide for Traders: Types, Placement and Real Examples
Hard stops vs mental stops, ATR-based stops, structure stops, and how to never let one trade ruin your week.
Why Stops Exist
A stop loss is a pre-defined exit that caps the worst-case loss on a trade. It is the cheapest insurance in finance.
Types of Stops
- Structure stop: below the prior swing low / above swing high.
- ATR stop: a multiple of the average true range (1.5–2x ATR is common).
- Percentage stop: fixed % from entry. Simple but ignores volatility.
- Time stop: exit if the trade does not work in N bars.
Stop Loss + Position Sizing
Your stop distance determines your position size. Wider stop → smaller size. Use the calculator.
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