risk
essential
Stop Loss
The predefined price at which you exit a trade to limit your loss.
A stop loss is the predefined price level at which you exit a losing trade. It's the single most important tool for capital preservation in swing trading.
Two common approaches:
- Structural stop: place the stop just below a meaningful technical level — the pivot low, a 50-day moving average, or the base low.
- Percentage stop: place the stop at a fixed percentage below entry, typically 5-8% for swing trades.
Swing Edge suggests stops anchored to structure (e.g. 2% below the pivot for active breakouts, ATR-based for continuations), clamped to a 3–12% range so they're meaningful but not absurd.
Position sizing using the stop
Risk per trade is typically capped at 0.5%-2% of account equity. Knowing your stop in price terms lets you compute the position size that respects that risk cap — e.g. with a ₹100,000 account, 1% risk, and an 8% stop, your position size is ₹12,500.