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Risk & Money Management

Where Not to Put Your Stop Loss

There are four places a stop loss cannot sensibly sit, and each is marked by a number: inside the reach of one ordinary bar, nearer than the platform's Stops Level, on the wrong side of the trade, farther than the account allows, or inside the spread's widening. This paper shows you a ten-pip stop and a twenty-five-pip stop from the euro's 10:00 price on 17 December 2025, from real hourly bars, and the 13:00 bar that went through the first; the idea as the yellow line on a station platform; the two lines on the chart; the other places with their example numbers; and the Stops Level row in the Specification on your platform.

Difficulty
Beginner
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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Inside one ordinary bar

The first place not to put a stop is inside the reach of one ordinary bar. Take the euro against the dollar on 17 December 2025, from its 10:00 price of 1.17187, with a ten-pip line and a twenty-five-pip line drawn below it. The 13:00 bar alone ran 19.8 pips from top to bottom, and its low, 1.17077, went through the ten-pip line; by 17:00 the price was at 1.17581, 39 pips above where it started. The twenty-five-pip line was never touched. In London and New York hours in 2025 the ordinary hourly bar on the euro — one bar holding one hour — was 16.8 pips, and 88 in a hundred were wider than 10. A stop inside that is hit by an ordinary bar.

The yellow line

Picture a station platform with its yellow line. The train sweeps the edge every time it passes, doing nothing wrong; the line is painted where the sweep reaches, and standing inside it is being hit by an ordinary train on an ordinary day. The yellow line on a chart is the width of one ordinary bar — 16.8 pips on the euro's hourly chart that year — and a stop inside it is standing in the sweep. The stop was not unlucky when the 13:00 bar reached it. It was inside the line, and the bars were the size they usually are.

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