Place your stops at a point that, if reached, will…
“Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not at a point determined primarily by the maximum dollar amount you are willing to lose”
About This Quote
This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation.
Set a stop loss based on the trade’s logical failure point, not just the amount you can afford to lose.
In simple terms: Stop when the trade proves wrong, not when money runs out.
Key Takeaway
Define risk by market signals, not just capital limits.
Themes
risk management
trading discipline
loss limits
Mood
cautious
analytical
Type
strategic
practical
When to use this quote
- stock trading
- forex
- options
- commodity futures
Key Concepts
position sizing
risk-reward analysis
Questions to Reflect On
- How do you determine the logical failure point?
- What indicators signal a trade is wrong?
A Different Perspective
If market conditions change, a fixed stop may be too early or too late.