Stop loss and take profit

A stop loss is an order that closes your trade automatically at a price where your idea has been proven wrong. A take profit closes it at your target. Together they turn a trade from an open-ended gamble into a defined-outcome bet you already agreed to.

• Below the swing low for a long, above the swing high for a short — beyond the level that invalidates your reason for being in.
• Give it breathing room: add a buffer for the spread and normal noise (an ATR-based buffer works well).
• Never place it at an obvious round number where everyone else's stops sit.
• Never place it based on the money you are willing to lose — that is what position size is for.

Target a level the market has a genuine reason to reach: a prior high or low, a support/resistance zone, a measured move. Then check the reward against the risk. If the nearest sensible target is closer than your stop, the trade is not worth taking — skip it.

A mental stop assumes you will be at the screen, calm, and willing to accept a loss at the precise moment you least want to. It also assumes no gap, no news spike and no lost connection. The one trade where that assumption breaks is usually the one that does real damage.