What a stop-loss is actually protecting
August 2026 · 5 min read
A stop-loss isn't there to be 'right'. It's there to cap the cost of being wrong. The moment you move it further away to avoid taking a loss, you've turned a defined risk into an undefined one.
The stop should be placed based on where the trade idea is invalidated, such as a structure break or a level failing, not based on how much money you're comfortable losing. If the invalidation point implies a loss you can't accept, the fix is a smaller position, not a wider stop.
Every signal published here logs entry, stop and target before the outcome is known, for exactly this reason: the plan has to be fixed before the emotion of a live trade sets in.
This article is educational and does not constitute financial or investment advice. See the full risk disclosure.