I hope you know what a stop loss order is.

I don’t want to be foul-mouthed again so if you want to know more about the stop loss order, please, click here.

As you already know, I only know one method for being a profitable trader. And it is using the stop loss order.

To be profitable isn’t a money matter as it isn’t a stop loss matter.

Trading with the stop loss order placed means to have plans.

You can live without plans too.

My bride for example doesn’t like plans.

This is the reason because for every journey she spends double.

But it’s not the place where to discuss about.

Well. You will not be a trader if you do not have plans.

Trading means discipline. Discipline means plans.

Planning your trading means planning the stop loss orders.

When you set up a strategy, for example with these chart patterns, you have to consider where to place your stop loss order.

For each strategy you use.

You can consider the difference between the different stop loss orders.

Someone want to understand the difference stop loss vs stop limit.

There isn’t a big difference.

A limit order needs to be beaten twice order to be caught.

A stop order need to be beaten once.

A limit order is usually a target or a countertrend entry.
A stop order is usually used with a trend entries. And for placing price stop losses.

If you wanna another stop loss order example you can click here.

Beware about the use of the stop loss.
The stop loss order is used by any profitable trader.

It doesn’t matter if you trade stocks or currencies.

A stock stop loss order is the same of a Forex stop loss.

The concept is the same: planning.

Well. I hope you have read my stop loss definition.

I’m sure you are a clever trader and you prefer to avoid your broker traps.

Now let’s consider that with a small capital, a capital between 1-3 thousand Dollars, you can open an undercapitalized account.

Day after day you can get little profits.

And day after day you can increase these profits.

Profits day after day

It’s not easy. But with an handsome coach like me you can do it. Click here to see my picture.

The stop loss order is your guardian angel. Before to enter in the market you need to know the level where to place the stop loss order.

I’ll provide you a general rule about the stop loss order. So, where to place the stop loss order? The rule is to place it some points far from the entry level: the distance between the entry level and the stop loss order should be short. Let’s consider the following chart.

 

Stop loss order and DT

The chart is about the  GBP/USD currencies. It shows a double max. Well, a possible entry is more or less around the max. The stop loss order should be placed some points above the entry order. For example, if you enter at 1.6426, set the stop loss order at 1.6430 or at max at 1.6431. Only you have to decide the exact level where to place the stop loss order. Always remember: consider short distances between the entry level and the stop loss order. The chart shows another possible entry around the top of the reversal bar. Also in this case, remember the stop loss order. Set the stop loss near the entry level. Specifically, set the stop loss order under the min of the previous bar. As you can see, the distance is more or less 4 points.

In any case, it’s not important I told you how many points far to the entry price to set the stop loss order. You have only to keep in mind the following principle: look at the chart, look for a signal and before to enter figure out your future moves. Figure out the entry level, the stop loss order and the take profit. Stop loss orders should be short, take profits should be long. That’s the key. That’s the secret for being successful.

If your stop loss order is short then even if the stop loss order is triggered, your loss will be small. But if you are right and the price moves in the way you figure out, your profit will be big enough. Otherwise if you set long stop orders then if the stop loss order is triggered you will lose a lot of your capital.

Setting stop loss orders is a very easy affair. It is more difficult having effective rules (short stop loss orders, long take profits) and even more difficult to respect the rules.

As already said, you have always to set the stop loss order. That’s because stop loss orders protect your capital and your profits.

Some days ago I was looking at the charts. The 30 minutes EUR/USD graph pictured the following: the St. Peter’s cross.

Short stop loss order

The St. Peter’s cross: a signal for a possible profitable entry. As already explained I usually set the entry under the min of the St. Peter’s cross. In the operation I made some days ago I set the entry at the St. Peter’s cross closure level. The entry was at 1.3632. As you can see I set a really short stop loss order. The stop loss order I set was at 1.3634.

In general, the rule is to always use the stop loss order. I set the stop loss order according to the chart signals.

As you can note in the above image, I set the stop loss order above the max of the previous bar. You have always to set quite short stop loss orders.

Then according to the chart, the stop loss order can be more or less short. In other words you have to look at the chart to know the exact point where to set the stop loss order.

Rules about the stop loss order are few and easy to learn. It can be more difficult to respect these rules.

For example when your entry order is triggered and your stop loss order is set, if the price moves towards your stop loss order you could be tempted to move the stop loss order further away. That’s a big mistake.

It’s a way for increasing your losses while keeping constant your profits. If you are a very disciplined person it can be quite simple to you to respect rules. If you are not, read the 3 following simple rules about the stop loss order every day:

  1. always set the stop loss order;

  2. always set your stop loss order shorter than your first take profit;

  3. set the stop loss order level according to the chart signals.

Are you curious to know the end of my trading combining the St. Peter’s cross entry with the stop loss order? The result is the following:

Profit using the stop loss order

If you trainee to following the rule I give you, you can make profitable trades.

Few important rules can help you to become a profitable trader.

This is an example.

So be aware, have plans.

Matt

26 thoughts on “General rules about the stop loss order

  1. Jacob

    Ehi.. wow
    how are you Matt? how have u spent your holidays?

    1. Matt Post author

      I’m fine and you?

  2. Emily87

    Hi Matt.. it’s nice to hear from u.
    Huge profit.
    I think I’m right if I say the double top isn’t outside the BB.. so why did you trade?
    I’m trying to follow the sentiment.. but I’m not ready yet.

    1. Matt Post author

      In this case, you need to focus on the stop loss order not on the entry.

  3. Melissa H.

    Hi Matt.. Nice profit!!
    I like the way you give us important advices..
    Have you spent the holidays with your family?

    1. Matt Post author

      Yes, I’m always with my family.

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  5. JeffryBat54

    how are you fella?
    good to hear from you
    nice job

    1. Matt Post author

      hi dude. fine thanks

  6. Bill T.

    Amazing Matt.
    Considering your entry it’s a very short stop loss order.
    Me too I trade the Eur/Usd but I’ve never placed a stop loss order so tight.
    I’d like to know how long it took you to find your edge.
    I mean.. that stop loss order is so short that your risk is almost equal to zero.
    When did you start online trading?
    I’m sure you wanna share some readings……………………………………:)

    1. Matt Post author

      more or less ten years ago.
      Honestly I don’t have read any book about trading.
      I know there are few good books but check by yourself.
      I had a master. A fucking master.
      I have become profitable after two years thank to observation.

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