Stop Loss Strategies
Place strategic stop losses using structure, ATR, or volatility methods. Use when protecting capital, defining trade invalidation, or managing downside risk.
Install
$ agentstack add skill-ske-labs-agent-trading-skills-stop-loss-strategies ✓ scanned · ✓ verified — works with Claude Code, Cursor, and more.
Security review
✓ PassedNo issues found. Passed automated security review. · v0.1.0 How review works →
- ✓ Prompt-injection patterns
- ✓ Secret / credential exfiltration
- ✓ Dangerous shell & filesystem operations
- ✓ Untrusted network calls
- ✓ Known-malicious package signatures
What it can access
- ✓ Network access No
- ✓ Filesystem access No
- ✓ Shell / process execution No
- ✓ Environment & secrets No
- ✓ Dynamic code execution No
From automated source analysis of v0.1.0. “Used” means the capability is present in the source — more access means more to trust, not that it’s unsafe.
About
Stop Loss Strategies
Proper stop placement protects capital while giving trades room to work.
Stop Loss Methods
1. Structure-Based (Recommended)
Place below swing low (long) or above swing high (short). Respects market structure with a clear invalidation point.
2. ATR-Based
Stop = Entry - (ATR x Multiplier) (typical multiplier: 1.5-2x). Adjusts to volatility automatically.
3. Support/Resistance Based
Place beyond (not at) key S/R zones. Below support for longs, above resistance for shorts.
4. Moving Average Based
Place below key MA (20, 50, or 200). Dynamic stop level, good for trend following.
5. Percentage-Based
Fixed % below entry. Simple but ignores structure -- use only as a position sizing limit.
Stop Placement by Trade Type
| Trade Type | Stop Placement | | ---------- | --------------------- | | Scalp | Very tight (0.3-0.5%) | | Day trade | Below minor structure | | Swing | Below major structure | | Position | Below trend structure |
Buffer Rules
Add buffer to avoid stop hunts:
- Below support: 0.5-1% buffer
- Based on ATR: add 0.3x ATR
- Round numbers: avoid exact round levels
Stop Management
Initial Stop: Set at entry based on analysis. Based on the invalidation point for the trade thesis.
Breakeven Stop: Move to breakeven after 1R profit. Locks in a risk-free trade. Not too early -- avoid getting stopped by noise.
Trailing Stop: Locks in profits as the trade progresses (see trailing-stop skill).
Workflow
- Identify invalidation -- the price level where the trade thesis is wrong
- Choose method -- structure-based for most setups, ATR-based for volatile assets
- Add buffer -- 0.5-1% or 0.3x ATR beyond the level
- Set the order -- always place an actual stop order, never a mental stop
- Manage -- move to breakeven at 1R, then trail (see trailing-stop)
Key Rules
- NEVER use mental stops -- always set an actual stop order before entering
- NEVER move a stop to widen a loss -- only move stops in the profit direction
- NEVER place stops at obvious round numbers or exact S/R levels -- add a buffer
- NEVER move to breakeven too early -- give the trade room to work past noise
- Define stop before entry and accept the loss level
- Tighter stops allow larger positions; wider stops require smaller positions
Related Skills
- trailing-stop -- manages exits after initial stop is set
- position-sizing -- stop distance is a direct input to position size calculation
Source & license
This open-source skill is cataloged on AgentStack and links to its original source — we do not rehost the code.
- Author: SKE-Labs
- Source: SKE-Labs/agent-trading-skills
- License: Apache-2.0
Install and usage instructions live in the source repository linked above.
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Versions
- v0.1.0 Imported from the upstream source.