Stop Loss

A stop loss is a predetermined exit point that limits your loss on a trade. It's an order that automatically closes your position when price reaches a level where your trade thesis is invalidated.

Key insight: A stop loss is not an admission of failure — it's a business expense. Every trade carries risk. The stop loss defines that risk precisely, converting an unknown potential loss into a known, manageable cost. Trading without a stop loss is gambling.

Your stop loss should be placed where your analysis is proven wrong — not at a random distance or at a level dictated by how much you're willing to lose. It should be at a price where the reason you entered the trade no longer exists.