Place the stop where you’re wrong
A stop-loss belongs at the price that proves your idea wrong — usually beyond a structure level like a recent swing low (for a long) or high (for a short), with a small buffer for noise.
Set it from the chart, not from how much you’re willing to lose in rupees. Then let your position size — not a tight, arbitrary stop — control the rupee risk.
Set targets from risk-to-reward
Your take-profit should reflect a sensible reward for the risk you’re taking. If your stop is 3% away, a 1:2 target sits 6% away; a 1:3 target, 9%.
Targets also belong at logical levels — prior resistance, a measured move, a round number — not at a random percentage. Where structure and a good ratio line up, you have a high-quality target.
The mistakes that hurt most
- Moving your stop further away to avoid being stopped out — converting a small planned loss into a large one.
- Setting stops so tight that normal noise triggers them before your idea plays out.
- Skipping the take-profit and giving back winners.
- Placing the stop where it’s convenient rather than where the thesis breaks.
Decide both levels before entry, and confirm your position size and liquidation price so a normal move can’t force you out early.