Stops and targets

Risk, psychology & your plan · All levels · 7 min read

You will learn to

Stops at invalidation
Avoid noise and obvious levels
Targets that are worth the risk

Stops

At invalidation: beyond the swing, the pattern or the zone — the price where the idea is wrong. Not a round percentage.
Outside noise: a stop closer than about 1 ATR is likely to be hit by normal movement.
Not exactly at the obvious level: add a margin beyond it — stops cluster there and get swept.
Never moved further away once in the trade. Moving it to breakeven after a meaningful move is fine.

Targets

The next opposing level, or a fixed multiple of R (2R in the tested pattern rule).
If the next level is closer than 1.5R, the trade is usually not worth taking.
Partial exits (half at 1R, rest trailed) smooth results but lower the average R; decide in advance, not mid-trade.

What our backtest found

In the journal analysis of earlier real trades, stops under 0.3% averaged −0.46R: fees and noise hit tight stops hardest.

Check yourself

1. Where does a stop belong?

1% below entry, always
Where the idea is proven wrong, with a margin beyond the obvious level ✓
At a round number

Invalidation, not convenience.

2. Price moves against you toward your stop. You…

Move the stop further away
Let the stop do its job ✓
Add to the position

Widening stops turns small losses into large ones.

Terms in this lesson

Breakeven stop: Moving the stop to the entry (plus fees) after a move in your favour.

Practise it on real charts. In the app, this lesson comes with real examples (reveal what happened next), a graded drill and the track test. Open the Academy in NexusCore — free →