Question 1

1. Fixed Percentage

Accepted Answer

The simplest stop-loss — close the position at a fixed loss percentage from entry. | Setting | Example | |---------|---------| | Stop Loss | 2% | For a long entry at $100, the SL triggers at $98.

Question 2

2. ATR-Based

Accepted Answer

A dynamic stop-loss that adapts to market volatility using Average True Range. | Setting | Example | |---------|---------| | ATR Period | 14 | | ATR Multiplier | 2.0 | SL distance = ATR(14) × 2.0. In a volatile market, the stop is wider; in a calm market, tighter. This prevents getting stopped out by normal price noise.

Question 3

3. Indicator-Based

Accepted Answer

Set the stop-loss at the level of a technical indicator: - Below **Parabolic SAR** dots - Below **Bollinger Band** lower band - Below a **moving average** (SMA, EMA) - Below **Supertrend** level The SL moves as the indicator value changes on each candle.

Question 4

4. Price Level

Accepted Answer

Set the stop-loss at a specific absolute price: | Setting | Example | |---------|---------| | SL Price | $95.50 | Useful when you have a specific support/resistance level in mind.

Question 5

SL Calculation

Accepted Answer

| Direction | Fixed 2% SL | |-----------|-------------| | **Long** | Entry Price × (1 - 0.02) | | **Short** | Entry Price × (1 + 0.02) | For ATR-based: | Direction | ATR-based SL | |-----------|-------------| | **Long** | Entry Price - (ATR × Multiplier) | | **Short** | Entry Price + (ATR × Multiplier) |

Question 6

SL with Grid Entry (DCA)

Accepted Answer

When using Grid Entry, the stop-loss is calculated from the **average entry price**, not the initial entry: 1. First grid order fills at $100 2. Second order fills at $97 → average entry = $98.50 3. SL at 3% from average = $95.55 The SL recalculates after each grid fill.

Question 7

Common SL Configurations

Accepted Answer

| Strategy Type | SL Type | Typical Value | |--------------|---------|---------------| | Scalping | Fixed % | 0.3% – 1% | | Day Trading | Fixed % or ATR | 1% – 3% or 1-2× ATR | | Swing Trading | ATR-based | 2-3× ATR(14) | | Position Trading | Indicator | Below SMA(200) | > **Tip:** A good rule of thumb is to set your stop-loss at a level where your entry thesis is invalidated. If you entered because RSI was oversold, the stop should be at a level where the oversold bounce clearly failed.

Question 8

FAQ

Accepted Answer

**Q: What happens if the market gaps past my SL?** A: In backtesting, the SL is executed at the candle's price that first crosses the SL level. In live trading, gaps can cause slippage. **Q: Should I always use a stop-loss?** A: Yes. Strategies without SL risk catastrophic drawdowns. Even signal-based exits should have a safety stop. **Q: Fixed % vs ATR — which is better?** A: ATR adapts to volatility, so it works well across different market conditions. Fixed % is simpler and easier to calculat

Question 9