Stops That Match the Structure

A common mistake is choosing a comfortable dollar loss first, then squeezing the stop to fit. That often puts the stop inside normal noise and guarantees frequent, meaningless exits.

Start from structure: the level that proves the idea wrong. Measure the distance. Then compute size so that distance equals your planned risk. Wide stops are fine when size is small.

We practise this with recent charts in the Position Sizing Lab. Traders leave able to reject ideas that would require either an oversized position or a stop that ignores the chart.

Time stops matter too. If the structure has not resolved within your planned window, exiting is a planning decision, not a failure of nerve.