I
Invalidation first
The stop should represent where the setup is wrong, not merely where the loss becomes uncomfortable.
Lesson · Trade Setup and Execution
Stop-Loss Placement
Place the stop beyond structural invalidation, allow appropriate execution room, and adjust position size to fit the account risk budget.
Synthetic educational examples
Core concepts
Use these concepts as explicit rules rather than changing them after seeing the outcome.
V
Volatility room
Allow normal price variation appropriate to the timeframe without making the stop arbitrary.
S
Size adapts
Wider structural distance requires smaller position size when account risk remains fixed.
Interactive lesson
Change the inputs, inspect the chart, and evaluate the decision before revealing the answer.
Drag the red stop line vertically
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Stop-loss placement process
Keep setup logic separate from account sizing, then connect them through price risk.
1
Mark structural failure
Identify the swing or boundary whose loss disproves the setup.
2
Place beyond failure
Add a justified buffer for volatility, spread, and timeframe.
3
Measure entry-to-stop distance
Use the actual planned entry rather than an idealized price.
4
Calculate position size
Divide the account risk budget by per-unit risk and round down.
Stop placement drill
Score 0 / 0Choose the stop logic that preserves the setup definition.
Stop sequence
1
Find invalidationIdentify the swing, boundary, or condition that proves the setup wrong.
2
Add execution roomAccount for normal volatility, spread, and the timeframe—without making the stop arbitrary.
3
Measure distanceCalculate price risk from entry to stop.
4
Size downReduce the position so the structural stop fits the account risk budget.
Common mistakes
1
Placing the stop where the loss feels acceptableThat price may sit inside normal setup variation and cause avoidable exits.
2
Using the same percentage stop on every setupDifferent instruments, timeframes, and structures require different distances.
3
Widening the stop after entryIncreasing risk after invalidation approaches changes the original plan.
4
Sizing first and forcing the stop to fitThis reverses the correct sequence and disconnects risk from structure.
Completion standard
✓
Finish when you can drag the stop to a valid price on each tab and say how many units the budget allows.
Valid means on the loss side of entry, beyond structural invalidation, and within about two ATR of it — and the unit count is the risk budget divided by the distance you chose, rounded down.
Scope: This lesson teaches process and measurement. It does not provide live market data, personalized recommendations, or trade signals.