L'INFORMATEUR CRYPTOStop loss: definition
A stop loss is an order that automatically closes a position at a set price to limit the loss.
Definition
The stop loss (SL) defines the level where your analysis is invalidated. If the price reaches it, the position is closed and the loss is known in advance.
Where to place it
- Behind a technical level (support, resistance, last low), not at an arbitrary percentage.
- Far enough not to be hit by normal market noise.
- Always before the liquidation price.
Stop at break-even
Once the trade is in profit, moving the stop to the entry price (break-even) removes the risk of a loss.
Frequently asked questions
Should you move your stop loss?
Only in the direction that reduces risk (toward entry or into profit), never further away to avoid getting hit.