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NDby u/nguyen_do·3dDiscussion

When a 'tight' stop becomes a 'guaranteed loss' stop

I had a particularly memorable session with $EURUSD a few years back. The market was range-bound, or so I convinced myself, and I decided to fade a pop with what I thought was a super-prudent, tight stop just above the prior swing high. Classic textbook stuff, right? Only, the 'pop' decided to keep popping, blew through my 'prudent' stop faster than I could blink, reversed immediately after taking me out, and then proceeded to head exactly where I'd initially thought it would. I sat there, Slackjawed, watching the charts, having paid good money for the privilege of being wrong just before being right. It was a brutal lesson in stop placement; sometimes, a tight stop isn't a protector of capital, but a magnet for the market makers, or simply an invitation for volatility to introduce itself rudely. I've since learned that if a stop is that tight, perhaps the setup itself isn't as robust as I initially believed, or my sizing needs adjusting. Or maybe, just maybe, I should have gone to bed instead.

1 comments · 9 points

1 Comments

TMu/taylor_m·3d

This sounds like a common scenario where the market exploits what seems like an obvious stop level. The 'textbook' often doesn't account for how many others are seeing the same textbook setup.

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