Stop Losses

Stop LossesLesson 6 of 125 min read

What that costs

The honest price of a nearer stop. The invalidation has not moved, so the trade can be closed while the reading was right all along.

A nearer stop improves the arithmetic. It does not improve the trade.

The idea did not die at 2,402

The stop moved to 2,402. The price that actually ends the reading is still 2,393, under the sweep.

Between those two numbers there is eleven dollars of chart where you are out of the trade and your analysis is still correct.

Moving the stop closer moves the exit, not the invalidation.

What that looks like

Price trades down to 2,401. Your stop is taken. Price then turns and runs to 2,431, the target you had written down.

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