Where to put a stop-loss, in three steps

What this video covers

A three-step method for stop placement: find where the idea is wrong, add a volatility buffer, then size the position. It also warns that stops can fill worse in gaps.

Sources and the longer explanation: Where Should I Put My Stop-Loss?.

Numbers shown on screen

• 25.64: VIX close, November 6, 2026

How the visuals were made

In 0:51 the video moves through 7 scenes, including a checklist, “Three steps”; a gauge with the level bands described on the page; a worked formula card (Size = money at risk ÷ distance to stop); a side-by-side comparison of Target beyond stop distance and Target closer than stop. All graphics were rendered frame by frame by UXS; no stock footage, logos or faces are used.

Chapters

• 0:00 Where should I put my stop-loss?
• 0:04 Three steps
• 0:15 Price gaps can skip your stop
• 0:18 Volatility sets the buffer
• 0:30 Step three, as a formula
• 0:35
• 0:42 Risk note

Transcript

Where should your stop-loss go? Where your trade idea is proven wrong.

First, find the level that invalidates the idea, like beyond a recent swing low on a long. Then add a buffer for normal noise. Then size the position to your risk limit.

Remember, stop orders can fill worse than the stop when price gaps.

Many traders use a multiple of the average daily range, often called ATR. When volatility is high, such as when the VIX is elevated, buffers need to be wider.

Position size equals the money you are willing to lose, divided by the distance to the stop.

Finally, check reward versus risk. If the realistic target is closer than the stop, the trade may not be worth taking.

The stop sets the risk; position size sets how much money it is. Educational only, not financial advice.