Hey trader,
I used to cry over trades, long before I learned to lean on a stop loss order.
Early in my career, the market made some huge moves while I held positions. I couldn’t get out because there wasn’t enough volume.
Thursday brought those days back to mind. By mid-afternoon, Nasdaq futures were down 5.87%, one day after a rally that surprised me.
Except I wasn’t going to cry.
Plenty of traders end up stuck the way I was. Nothing stands between one bad trade and a wrecked account.
Years ago, I made a single change that honestly saved my trading career and ended my tears for good.
My fix was a backstop. For me, that’s a stop loss order, which closes a trade at a price I set ahead of time.
My exact rule may not fit how you trade. The reasons behind it apply to everyone, so let’s start there.
Why I Got Stuck in the First Place
I learned to trade on a trading floor. Some of those early sessions were brutal.
The markets were wildly volatile. I got caught in positions I couldn’t get out of, and I lost a lot of money.
There wasn’t enough volume to exit. I still had to keep quoting prices while I sat in those trades.
One of my bosses had a line for days like that. He’d say,
“Jody, you’ve just been initiated. Tomorrow’s a new day. Wipe the slate clean.”
That was easy for him to say.
You don’t need a thin market to end up stuck the way I was. A trade with no stop loss order or exit plan traps you just as well.
Without one, you have to decide when to get out at the worst possible moment. You’re scared, you’re hoping, and the market keeps moving against you.
Why My Stop Loss Orders Go Below the Lows
My rule is simple. On any position I hold, I leave my stop loss order below the lows.
I don’t pick that spot at random. The lows mark the price that proves my idea wrong.
A pattern can look like a bottom. It only stays a bottom until price breaks below the lows again.
Once that happens, I don’t have to guess or argue with the chart. My stop loss order takes me out, and I move on.
How Thursday Tested My Stop Loss Order Rule
I’d been watching a setup in the Nasdaq. Price dipped below my Structure Channel, which is the part of my Market Map that tracks the bigger-picture trend.
It often goes below that channel before it turns. When it bounced, I really thought that could be the low, because the pattern looked beautiful.
Thursday took out those lows. Then it broke through the next level down too.
A trader who bought that bounce with a stop loss order below the lows got out early on a very ugly day. A trader without one was still holding as Nasdaq futures slid toward a 5.87% loss.
The damage was worse in individual stocks. Several of the chip names I track were down double digits on the day.
How to Build Your Own Backstop
Your backstop doesn’t have to look like mine. Some traders trade smaller size, while others use options positions where the most they can lose is fixed at the start.
A stop loss order is the simplest version, and it’s the one I use.
Whatever form yours takes, it needs three things to protect you:
- You set it before you enter, while you’re calm and thinking clearly.
- It sits at the price that proves your trade idea wrong.
- It works without asking how you feel in the moment.
That last point is where a stop loss order shines. It doesn’t care how you feel about the trade.
I put limits on my trading day too. On Thursday, I took my trades in the morning and then told the room I was done for the day.
We’re humans, and emotions show up on days like this one. If you manage your risk, you don’t have to cry.
My old boss was right about one thing. Tomorrow really is a new day, as long as your account is still in one piece.
Jody Samuels
Queen of Quid
