Moving Stops

Key idea

Moving a stop further away mid-trade — hoping a losing position will 'come back' — converts a defined, planned loss into an undefined, growing one. The stop should only move in the direction that locks in progress (trailing a winner), never away from price to give a losing trade more room.

How to apply it

• Set the stop at technical invalidation before entering, and treat that placement as final unless the trade is working in your favor.
• If you feel the urge to move a stop further away, ask whether the original technical thesis has actually changed — usually it hasn't.
• Only adjust stops to trail progress (tightening toward the current price), never to loosen risk on a trade that's going against you.
• If a stop genuinely needs to change because new structure has formed, that's a new trade decision — size it accordingly, don't just extend the old risk.

Example

A trade hits its predefined stop at $47 after being entered at $50. The urge is to move the stop to $44 'to give it room' — but nothing about the technical thesis changed; the setup is simply wrong, and the original stop should be honored.

Checklist

• My stop was set at technical invalidation before I entered
• I have not moved this stop further away since entering
• Any stop change I've made only tightened risk, never loosened it
• If I want to change the stop, I've confirmed the technical structure actually changed

Common mistakes

• Moving a stop further away hoping a losing trade recovers
• Removing a stop entirely rather than honoring the original plan
• Confusing 'the trade might still work' with a genuine change in technical structure
• Loosening risk after entry instead of accepting the original invalidation