GLOSSARY · RISK & PERFORMANCE
What is Stop Loss?
A stop loss is an order that closes your trade at a preset price to cap the loss.
Stops belong where your trade idea is proven wrong — beyond the level that invalidates the setup — not at an arbitrary dollar amount. Then size the position so that stop equals your planned risk.
Never widen a stop after entry. That turns a planned loss into an unplanned one.
EXAMPLE
Long an ORB breakout at 5,021 with the range low at 5,010: a stop just below the level that invalidates the breakout limits the loss to a known number of ticks.
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