Stop loss: what it is and where to place it

The price falls to the dashed stop line and the trade is closed there. — Example: For a long, the stop usually goes a little below support so normal swings do not trigger it.

How a stop loss works

A stop is a conditional order. Until price reaches the set level it just waits. When price gets there, the order triggers and the position is closed. For a long the stop sits below the entry, for a short above it.

There are two main types. A stop-market order closes at the market price once triggered: the fill is almost certain, but the price can be worse than the level you set. A stop-limit order places a limit order: you control the price, but in a fast move it may not fill. More in stop orders and slippage.

Where to place it

The stop goes where the trade idea is no longer valid, not where the loss still "feels fine". For a long that is usually a little below the support zone, for a short a little above resistance. The distance to the stop together with the position size decides how much you lose if the stop is hit.

Real example: BTC in the 2024-2025 winter

From late November 2024 to February 2025 BTC/USDT bounced several times from a zone around 89,000-91,500. On 13 January a wick dropped to 89,257, but the day closed at 94,536. A stop just below 90,000 would have been hit even though the level held, while a stop with a buffer below the zone would not. On 25 February price closed below the zone at 88,680, and by 11 March it had fallen to 76,606. For a long, a stop under the zone would have capped the loss at a level known in advance.

BTC/USDT daily chart from November 2024 to March 2025: the support zone around 89,000-91,500, the 13 January wick, an example stop at 88,500 and the fall to 76,606. — BTC/USDT, 1D, 2024-11-20 to 2025-03-12, Binance data. The 88,500 stop is a teaching example, not a real trade and not investment advice.

Common mistakes

Not using a stop at all, or keeping it "in your head". In a fast move it is too late to decide.
Placing the stop exactly on a round number or level, where wicks often reach. See stop hunt.
Moving the stop further away as price approaches it. That turns a limited loss into an open one.
With leverage, placing the stop beyond the liquidation price. Liquidation then happens before the stop.

Skenuok scanner plan screen: stop loss level, targets T1 and T2, invalidation rule and R:R. — Real Skenuok app screen, 2026-09-07 data: a scanner plan with a stop, targets and an invalidation rule. Not investment advice.

How to practise

Before every practice trade, write down three numbers: the entry, the stop, and what percentage of the account you would lose if the stop were hit. Later check whether your stops sat where the idea really stopped being valid. The Skenuok app's scanner plan shows the entry, stop, targets and invalidation rule, so you can compare your choice with it. The full system: Risk management and stop loss.

RiskThis content is for education only and is not financial or investment advice. Crypto trading carries a high risk of loss. We do not promise profits.

Frequently asked questions

Does a stop always fill at the exact price?

Not always. In a fast move a stop-market order can fill at a worse price, which is called slippage. A stop-limit order controls the price but may not fill.

What percentage should a stop be?

There is no single number. The chart decides the stop, not a percentage: it belongs beyond the level whose break cancels the idea. The amount of money at risk is controlled with position size.

How is a stop loss different from a take profit?

A stop closes the position when price moves against you, a take profit when it reaches your target. They are often set together, sometimes as one OCO order.