ConceptUpdated 2026-10-19
The stop: deciding where you're wrong
A stop is the price that proves the trade idea wrong. It's chosen before entry, placed as a live order, and only ever moved in your favor.
A stop answers one question before you buy: at what price is this idea wrong? If price gets there, you're out. No debate, no hoping.
Where I put it
On most swing entries the starting stop goes just under the low of the entry day. If a stock I bought for strength trades below the low of the day I bought it, the strength wasn't there.
Examples from the record:
- MRVL: bought September 30, stop at that day's low.
- IBRX: bought at the 8 EMA, stop at that day's low.
- APH: an intraday entry, so the stop went under the wick low of the first 30-minute candle instead.
Rules for stops
- Chosen before the fill. The stop sets the size of the trade (see position sizing), so it has to exist first.
- A live order, not a number in your head. A stop you plan to "watch" is the stop that doesn't get honored. See stops are live orders.
- Only moves up (for a long). Raising a stop locks in progress. Lowering it turns a planned loss into a bigger one.
What a stop can't do
A stop order becomes a market order when it triggers. If a stock opens below your stop, you get filled at the open, not at the stop. That's gap risk, and it's why a −1R plan can turn into a −1.4R result.
Trades that cite this
3 finished · win rate 33% · expectancy +0.98R · total +2.95R
Related
- Breakout from a baseA leading stock clears the top of a multi-week base on rising volume. Buy the break, stop under the breakout day, add only on a new base.
- Gap risk: when the stop doesn't save youIf a stock opens below your stop, the stop fills at the open, not at your price. Holding overnight always carries this risk, and the record shows it.
- Plan before the fillEvery new buy has a setup, a one-line trigger, a stop, a size worked out from that stop, and a first target with a trim amount, all written down before the order fills.
- Position sizing: size comes from the stopYou don't pick how many shares to buy. You pick how much you're willing to lose and where your stop is; the share count falls out of the math.
- Pullback in an uptrendA strong stock dips back to its rising 8 EMA and holds. Buy the hold, stop under the day's low, trim into the next push.
- R: measuring every trade by its riskR is the amount you planned to lose if the stop hit. Every result on this site is a multiple of it, so a trade reads the same at any account size.
- Risk firstDecide what you can lose, and where you're wrong, before thinking about what you can make.
- Squeeze: tight range, building momentumVolatility contracts into a tight range while momentum builds underneath. The entry is the break out of the coil, with a stop at the day's low.
- Stops are live ordersThe stop is a working GTC order at the broker the same session it's decided, and the journal matches it. A stop that only exists in your head isn't a stop.