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Want to know the real reason most traders fail and get stuck in a spiral of lost time, money, and stress?

Well it's not because they can't find good entries.

It's not because they don't understand technical analysis.

It's because they never learned the art of the stop loss.

The real reason is something I learned the hard way early in my trading career…

When I started day trading I treated stop losses like suggestions rather than rules.

I'd move them, ignore them, or worse - not use them at all.

The result?

Multiple blown accounts and years of frustration.

I had to go back to the drawing board and paper trade for 2 years to figure this out to turn profitable and get the life I have today.

And there was an important perspective shift I had that changed everything...

Your stop loss isn't just about preventing losses - it's about defining the exact moment you're proven wrong.

Recently, during a live trading session, I spent significant time explaining this concept to my students.

It's THAT important.

Because most traders place stops based on how much money they're willing to lose and thats backward thinking.

Your stop should be based on where your trade thesis is invalidated

The exact point at which the market tells you "this setup isn't working."

Sometimes that means giving a trade more room to breathe…

Sometimes it means keeping it tight.

But it ALWAYS means having a clear, predefined point where you exit - no questions asked, no emotions involved.

And when you do that, you will get out of the spiral of losses because you will start winning more than you lose.

So next time you’re setting up a stop you can follow these 3 actionable steps to increase your chances of profiting…

1. Set Your Stop Based on Trade Thesis: Determine where your setup becomes invalid, not just how much you’re willing to lose.

2.  Avoid Emotional Changes: Once your stop is set, don’t move it unless you have a solid technical reason.

3. Use ATR (Average True Range): To set an appropriate stop distance, consider using ATR to give trades room to move while protecting your capital.

Think about it this way...

Every trade is a hypothesis where you’re basically saying

"I think the market will do X because of Y."

Your stop loss is simply the point at which that hypothesis is proven wrong. This is a direct signal to test another trading setup if you want to achieve better market results.

When you do, your win rate will improve, your stress levels will drop, and, most importantly, your account will start growing consistently.

Trading with discipline,

Team Theta Warrior