How to set stop-loss reasonably? Avoid being wiped out or losing big; practical standard methods

Previously, we discussed:
Filtering mechanisms → Fake breakouts → Support and resistance → Trend judgment → Pullback entry
Today’s sixth article covers the all-important safety net of all technical analysis: stop-loss.
Many people don’t lose due to poor judgment,
but because of: chaotic stop-loss placement, getting wiped out, or massive losses.
This entire guide is practical and can be directly followed.

1. There are only two reasons why your stop-loss keeps getting triggered
1. Stop-loss placed too close:
Normal fluctuations will wipe you out, but the trend continues.
2. Stop-loss placed too far:
When correct, you make small profits; when wrong, you lose big, wiping out previous gains.
Qualified stop-loss:
Follow market fluctuations + hold the structural bottom line + control individual trade losses.

2. Core principles of stop-loss
1. Place stop-loss outside the structure, don’t keep it in your mind
Setting stop-loss based on feelings will definitely lead to losses.
2. Once the stop-loss is set, do not move or hold the position
Moving the stop-loss = disguised holding of the position.
3. Single trade loss ≤ 1% of total capital
This aligns perfectly with the position sizing logic I previously discussed.
4. Use small stop-loss in trending markets, larger in counter-trend trades
Never take counter-trend trades, no matter how good they look.

3. The 3 most practical stop-loss methods (use directly)

1) Structural stop-loss (most stable, most common)
- Long positions: place stop-loss just below support
- Short positions: place stop-loss just above resistance
Logic:
Breaking the structure indicates a wrong judgment; the market has changed and must move.

2) Candle-based stop-loss
- Long positions: place stop-loss below the low of the entry candle’s body
- Short positions: place stop-loss above the high of the entry candle’s body
Suitable for: pullback entries, breakout confirmations.

3) Swing stop-loss
- Uptrend: place stop-loss below the most recent valid low
- Downtrend: place stop-loss above the most recent valid high
Suitable for holding mid-trend trades and trend-following.

4. Four stop-loss methods to absolutely avoid

1. Arbitrarily setting a fixed number of points (10, 20, 50)
2. Setting stop-loss based on how much you want to lose
3. Moving stop-loss to the entry price after profits (frequent wipeouts)
4. Enlarging stop-loss after losses, pretending there’s no stop-loss
All of these are signs of impending liquidation.

5. Complete cycle: stop-loss + position size + entry
Based on all my previous articles, it forms a systematic approach:
1. Identify the major trend (follow)
2. Find key support/resistance
3. Wait for pullback or true breakout
4. Enter near key levels
5. Place stop-loss outside the structure
6. Keep individual position size at 1%~2%
7. Focus on the core, avoid greed for the tail

If you can stick to this long-term, you’ve already beaten 90% of traders!