Stop Loss Optimizer

Start with ATR-based stops: 2× ATR below entry is a good default. Alternatively, place just below recent support or swing low. Ensure the risk fits within your position sizing rules (1-2% portfolio risk).

For liquid Canadian stocks, stop-market is generally better - you're guaranteed an exit. Use stop-limit only for less liquid stocks where you prefer no fill over a bad fill, but understand you may be left holding on a gap.

Only in your favor! Move stop to breakeven after profit (usually 1R). Trail stop up as price rises. NEVER move stop further from entry to 'give it room' - that's called 'hoping' and leads to larger losses.

It happens. Your stop protected you from a scenario where it didn't rebound. Don't re-enter emotionally. If the setup still looks good, wait for a new entry signal. Being stopped out occasionally is the cost of protection.

It depends on the stock's volatility. Instead of fixed percentages, use ATR-based stops: 2× ATR adapts to each stock. If using percentages, volatile stocks need 10-15%; stable stocks 5-8%.

Signs of too-tight stops: frequently stopped out then price recovers, win rate is low but losses are small, constantly re-entering the same trade. Solution: widen to 2-2.5× ATR or below significant support.

Common triggers: after 1R profit (standard), after 1.5R (conservative), or from entry (aggressive). Trailing too early gets you stopped on normal pullbacks. Wait for the trade to prove itself first.

Don't place stops at obvious levels (round numbers, exactly at support). Offset below by 0.25-0.50× ATR. Use ATR-based stops which are less predictable. Consider wider stops that are beyond the 'hunting zone'.

Yes. When VIX is high or ATR has expanded, normal daily ranges are larger. Use 2.5-3× ATR instead of 2×. Or use the current ATR (which will be higher) rather than a historical average.

A time stop exits if no progress after X days. Use for: stagnant positions (capital tied up), after catalysts that didn't work, mean reversion strategies. Example: exit if not at 1R after 15 days.

Backtest various stop distances (1.5×, 2×, 2.5×, 3× ATR, etc.). Measure expectancy, Sharpe ratio, profit factor, and max drawdown for each. Select the distance that optimizes your preferred metric. Validate on out-of-sample data.

SAR uses an acceleration factor that starts small (0.02) and increases with each new high (up to 0.20). This causes the stop to trail slowly at first, then accelerate as trend extends, catching reversals faster. Good for trends that exhaust.

Track total heat (sum of all position risks). Limit to 6-10% of portfolio. Consider correlated positions as a group. Use daily loss limits (2-3% = stop trading). Integrate with drawdown protection at 10-15% portfolio drawdown.

Options: 1) Underlying stop - exit options if stock breaks level. 2) Premium stop - exit if option loses 50% of value. 3) Time stop - exit by specific DTE (e.g., 21 days). 4) Delta-equivalent - convert to stock equivalents and apply stock stop logic.

Trail stop = Highest High (22 days) minus 3× ATR. It 'hangs' from the highest high like a chandelier. Benefits: captures trends, volatility-adjusted, objective. Calculate daily; exit when price drops to this level.