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#StopLossStrategies
A stop-loss (SL) is a risk management tool that automatically exits a trade at a predetermined price to limit losses. Here are key strategies:
#### **1. Fixed Percentage Stop**
Set a fixed % below entry (e.g., 5–10%). Simple but ignores volatility.
#### **2. Volatility-Based (ATR Stop)**
Uses **Average True Range (ATR)** to set a dynamic SL (e.g., 1.5x ATR below entry). Adapts to market conditions.
#### **3. Support/Resistance Stop**
Place SL just below support (long) or above resistance (short). Avoids exiting prematurely.
#### **4. Moving Average Stop**
Exit when price closes below a key MA (e.g., 20-day or 50-day). Works well in trending markets.
#### **5. Trailing Stop**
Locks in profits by adjusting SL as price moves favorably (e.g., 5–10% trailing distance). Ideal for strong trends.
#### **6. Time-Based Stop**
Exit if trade doesn’t perform within a set period (e.g., 1 week). Avoids stagnant positions.
#### **7. Risk-Based Stop**
Risk a fixed dollar amount per trade (e.g., $500 max loss). Ensures consistency.
#### **8. Parabolic SAR Stop**
Uses the **Parabolic SAR** indicator for trend-following exits. Works best in trending markets.
### **Best Practices**
- **Avoid round numbers** (e.g., $50) where stops cluster.
- **Adjust for volatility**—wider SL in choppy markets.
- **Risk ≤1–2% of capital per trade** to preserve capital.
- **Backtest** to ensure effectiveness.
Stop-losses are crucial for disciplined trading—combine with position sizing for optimal risk management.
$BTC
A stop-loss (SL) is a risk management tool that automatically exits a trade at a predetermined price to limit losses. Here are key strategies:
#### **1. Fixed Percentage Stop**
Set a fixed % below entry (e.g., 5–10%). Simple but ignores volatility.
#### **2. Volatility-Based (ATR Stop)**
Uses **Average True Range (ATR)** to set a dynamic SL (e.g., 1.5x ATR below entry). Adapts to market conditions.
#### **3. Support/Resistance Stop**
Place SL just below support (long) or above resistance (short). Avoids exiting prematurely.
#### **4. Moving Average Stop**
Exit when price closes below a key MA (e.g., 20-day or 50-day). Works well in trending markets.
#### **5. Trailing Stop**
Locks in profits by adjusting SL as price moves favorably (e.g., 5–10% trailing distance). Ideal for strong trends.
#### **6. Time-Based Stop**
Exit if trade doesn’t perform within a set period (e.g., 1 week). Avoids stagnant positions.
#### **7. Risk-Based Stop**
Risk a fixed dollar amount per trade (e.g., $500 max loss). Ensures consistency.
#### **8. Parabolic SAR Stop**
Uses the **Parabolic SAR** indicator for trend-following exits. Works best in trending markets.
### **Best Practices**
- **Avoid round numbers** (e.g., $50) where stops cluster.
- **Adjust for volatility**—wider SL in choppy markets.
- **Risk ≤1–2% of capital per trade** to preserve capital.
- **Backtest** to ensure effectiveness.
Stop-losses are crucial for disciplined trading—combine with position sizing for optimal risk management.
$BTC
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