Risk and psychology
Stop loss
Definition
A stop loss is the price at which you exit a losing trade, decided before you enter. Place it where your trade idea is proven wrong, such as just beyond the level you are trading, then size the position so hitting it costs a planned amount. Our guide to stop loss and take profit covers placement in detail.
Example
Say you buy a stock at $25.00, just above support at $24.20, and place the stop at $24.00, below that level. The risk is $1.00 a share, so a planned loss of $200 means 200 shares. A stop at $24.90 would risk less per share, but it would sit above support, where ordinary noise can trigger it before the trade idea is proven wrong.
Hypothetical numbers, for illustration only.
UpTickFlow is our product. These guides are education, not financial advice. Trading involves a substantial risk of loss.