Why it is decided before entry
Before a trade is on, the level that would prove the idea wrong can be judged calmly. Once money is moving, the same level looks negotiable. A stop set in advance is a decision made by the version of you that was thinking clearly.
Where it goes
At the price that means the reason for the trade no longer holds — beyond a structural level, not at a round number of pips chosen for convenience. If that level is further away than your risk allows, the answer is a smaller position, not a closer stop.
Moving it is the expensive habit
Widening a stop because price is approaching it converts a planned, survivable loss into an unplanned one. It also works, most of the time, which is exactly the problem: the habit is rewarded repeatedly and then removes the account in one trade.
It is protection, not a guarantee
A stop becomes a market order when triggered, so a gap or a violent release can fill it well past the level. This is why position size, not stop placement, is the real control on risk.
In short
| Decided | Before entering |
|---|---|
| Placed | Where the trade idea is wrong |
| Guarantees | An exit attempt, not a price |
| Never | Widened once the trade is live |
Common questions
How far away should my stop be?
Far enough that ordinary noise does not reach it, which is a question about the chart and the instrument, not about your account. The account decides the position size that makes that distance affordable.
Do brokers hunt stops?
Clusters of stops at obvious levels do get taken out, but that is the market reaching for liquidity rather than your individual broker looking at your order. The practical response is not to place stops at the most obvious level everyone else uses.
Is a mental stop good enough?
It works until the one time it does not, which is the trade that matters. A stop in the platform executes when you are asleep, offline, or unwilling to act. A mental stop requires you to be all three of the opposite.
Trading forex and CFDs on margin carries a high level of risk. Most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade.