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Where a stop-loss goes, and why it is decided first

Beginner · 5 min read

A stop-loss is the price at which your reason for the trade stops being true. It is chosen from the chart or the thesis — below the support the trade relies on, beyond the level a breakout must hold — and only then is the position sized to fit it.

Decide it before you enter

Before the entry you are calm and the loss is hypothetical. After it, every tick is personal, and “it will come back” becomes very easy to believe. Writing the stop down first takes that decision away from the worst possible moment.

Common mistakes

• A rupee stop, not a market stop. “I'll exit if I lose ₹1,000” ignores where the market actually turns. Pick the price, then size the trade.
• Too tight. A stop inside normal day-to-day noise gets hit even when the idea was right.
• Moving it further away. Widening a stop after entry turns a planned small loss into an unplanned large one. Moving it towards profit to lock gains is fine.
• Assuming the exact price. Stops can fill worse than the level in a fast market or a gap — that is slippage. Size with some room for it.

Every idea published on Kestrel carries its stop-loss from the start, and the record shows when it was hit.

Next: Reward-to-risk and win rate: the two numbers that decide everything →