How to use a stop loss order properly
Here’s a simple guide for you to follow:
- Identify the market structure
- Set your stop loss order away from the market structure
Let me explain…
Step 1: Identify the market structure
Market structure refers to things like support and resistance, trendline, etc.
It behaves like a “barrier” that is hard for the price to get through.
This makes it difficult for the price to reach your Stop Loss Order.
Step 2: Set your stop loss order away from market structure
A Stop Loss Order is placed at where your trading setup will be invalid if price hits it.
So in order for you to not get stopped out easily, you’ve got to give it some “buffer”.