How to Stick to Stops?

How to Follow Stop-Losses and Maintain Control Over Your Trading

After creating a solid trading plan with well-defined stop-losses, the key to success is strictly adhering to those stops, especially when the market moves against your position.

There are two ways to ensure discipline with stop-losses:
1️⃣ Automatic stop-loss – setting a Stop Loss order when opening a trade.
2️⃣ Mental stop-loss – manually closing the trade when it reaches a pre-determined level.

Which method is right for you? This depends on your level of discipline. Can you control your emotions and follow your rules no matter what?

In the heat of trading, the difference between long-term winners and losers often comes down to one trait: winners strictly follow their predetermined trading plans.

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Why Do Traders Violate Stop-Loss Rules?

❌ Refusing to close a trade when the stop is hit
Many beginners doubt themselves and try to hold onto losing trades, hoping for a reversal.

💬 Common thoughts include:
"Maybe the market will turn around right now… If I hold on just a little longer, it will go in my direction!"

🚨 Wrong! 🚨
If the price reaches your stop-loss, the trade should be closed immediately—no exceptions. This means taking a controlled loss, which is much better than a catastrophic one.

This is why professionals always use stop-loss orders!
With automatic stop orders, the trade will close without emotions, exactly at the set level. You don’t even need to be in front of your screen—it happens automatically.

📌 New traders should always use automatic stop-losses.
As you gain more experience and discipline, you may consider using mental stops, but only if you are fully confident in your ability to act rationally under pressure.

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Proper Stop-Loss Usage: Do’s and Don’ts

✅ What You Should Do:
✔ Move your stop-loss in the direction of profits.
If the price moves in your favor, you can adjust the stop-loss to lock in some profits and protect the trade from reversing into a loss.

✔ Follow pre-set rules.
Any stop-loss adjustments must be planned before entering the trade. Never adjust your stop based on emotions.

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🚫 What You Should NEVER Do:

❌ Widen your stop-loss!
Never move your stop further into the red, as this increases your potential loss.

💥 If the market hits your stop, it’s a signal that your trade idea was wrong. Exit the trade and look for a new opportunity.

❌ Change your stop-loss due to emotions.
Panic, fear, or greed should not influence your trading decisions. Set your rules before trading and stick to them.

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Final Thoughts

📌 Stop-loss rules are simple but require discipline:

• Use automatic stop-loss orders if you're unsure of your discipline level.
• Never adjust stops based on emotions—only follow pre-planned criteria.
• Never widen your stop-loss—if the market reaches your limit, exit immediately.

🔹 A professional trader is one who controls risk.
🔹 You can’t avoid losing trades, but you can avoid major losses.

‼ The Most Important Rule:
📢 NEVER WIDEN YOUR STOP-LOSS!

 

Follow these principles, and your losses will remain controlled, while your winning trades will outweigh the losing ones! 🚀