How to Set a Stop Loss in false breakout strategy

One of the first rules of trading, which is emphatically put into a trader’s head, is the obligatory placement of a stop-loss order to limit his possible loss if the price goes in the opposite direction to the open trade. There is no doubt that one of the most important qualities of a trader is the ability to manage his losses – this is the direct purpose of StopLoss order.

Stop Loss is a kind of stop order which is put by a trader in order to limit his possible losses in situation when the market went against the open trade.

Stop-loss automatically closes the placed position when the set price value is reached. The order is stored on the server of the exchange, so there is no need to keep the terminal turned on to trigger it.

StopLoss order can close the transaction either for the entire volume at once, or for a part. The opposite order, the main purpose of which is fixation of profit from the transaction, is Take Profit.

StopLoss order can close the transaction either for the entire volume at once, or for a part. The opposite order, the main purpose of which is fixation of profit from the transaction, is Take Profit.

StopLoss can be set for any type of orders, including pending orders.

A correctly chosen stop loss – a pending order that limits the loss of a trade – greatly increases the overall profit of the strategy. Stop Losses that are too large may not be covered even by a significant number of profitable trades. A small stop-loss will increase the number of losing orders due to volatility spikes on political news and economic statistics publications.

Today we’re going to talk about setting stop losses in a false breakout strategy that you can use in all markets: cryptocurrencies, forex, stocks and wherever you want to trade.

The first type of stop loss I use is a technical stop loss. It is very easy to use when you are trading a false breakout strategy. For example, you trade a false breakout strategy and the price makes a false breakout, we have this level, the price might fall back and according to your strategy a false breakout is possible, you open a position and set a stop loss below the tail plus the spread. After that, the risk:reward will be many times bigger. If you want to set a technical stop loss, you need to know what levels are important and how to use them.

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