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Stop loss

A pre-set exit point that limits how much you lose on a position.

Risk & PsychologyBeginner

Definition

Set it before entering, at a level that shows your idea is wrong, such as below a support level or a key moving average, rather than at an amount you merely want to avoid losing. Then size the position so that hitting the stop costs a tolerable amount.

Watch out for

Stops can fill below your price on gaps. A stop that is too tight gets hit by normal noise.

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