1. The best stop-loss is one you will use at all times. Any stop-loss is better than no stop loss. Be disciplined. 

2. Determine your stop-loss before you enter the trade.  This causes you to consider your entire plan while your mind is at ease.  

3. Your stop-loss method should be written. It is an integral part of your overall trading plan. 

4. Move stops only in the direction of the trade. Never adjust your stop to prevent being stopped out. You’re being stopped out for a reason.  

5. A good stop-loss will not protect a bad entry. A stop-loss is only as good as your entry. If you get stopped out, analyze whether the trade or the stop-loss was the problem. Make adjustments.  

6. Protecting profits is equally important as protecting from losses. Some traders lose focus after they get into a successful trade and forget to raise stops in a timely manner.  

7. A triggered stop-loss is not always the end of the trade. You may find that you can re-assess the trade, re-position yourself, and make a better entry. 

8. The market doesn’t know about your premise. Trading against the broader market trends will stop you out whether your premise makes sense or not. 

9. Smile when you get stopped out. You probably saved a lot of money.  

10. Mental stop-losses are for mental traders. Re-read #1.  

 

You can’t control the market, but you can control your risk. The more I trade, the more I look for my stop-loss first; then I try to enter the trade as close to it as possible. It’s better to take small financial losses instead of big mental losses.