5 Types of Stop Losses: When to Use Each One
5 Types of Stop Losses and When to Use Each One
Not all stops are created equal. Most traders use one type — the hard stop — and ignore the other four. That’s like owning a toolbox with only a hammer.
Our Risk Management Playbook defines five stop types, each designed for different market conditions and trade setups.
1. Hard Stop
A fixed price level entered at trade entry. Non-negotiable. The platform executes it regardless of your emotions. This is your default — every trade should have one.
When to use: Always. Every single trade. No exceptions.
2. Structural Stop
Placed based on market structure — below support, above resistance, beyond a key level. The logic: if price reaches this level, your thesis is invalidated.
When to use: Mean reversion trades where specific levels define the trade thesis.
3. Trailing Stop
Moves with price as the trade goes in your favor. Locks in profits while giving the trade room to run. We use 3x ATR trails in our breakout strategies.
When to u...
The Drawdown Throttle: Auto-Reduce Risk Before Blowup
The Drawdown Throttle: How to Auto-Reduce Risk Before You Blow Up
Every blown account has the same autopsy: the trader kept full size during a drawdown.
They knew they were losing. They felt the tilt building. And instead of throttling down, they pressed harder — trying to make it back in one trade. The math was against them before their finger hit the buy button.
At HTA, we built a system that makes throttling automatic. We call it the Drawdown Throttle, and it’s the single most important risk architecture you can install in your trading.
How Does the Drawdown Throttle Work?
It’s a pre-set system of position size reductions tied to drawdown thresholds. No judgment calls. No “I’ll be careful.” The rules trigger automatically based on where your equity sits.
Here’s a simple version:
Level 1 — Down 2% on the day: Cut position size by 50%. You’re still in the game, but with half the exposure.
Level 2 — Down 3% on the day: Stop trading. Pau. Close the platform. You’re done for the ...
The One Risk Rule That Separates Pros from Blown Accounts
Most traders obsess over entries. They spend hours scanning charts, backtesting setups. Remember, the process matters more than profits, hunting for the perfect candlestick pattern — then slap on a random position size and wonder why one bad trade wipes out a week of gains.
We've seen it hundreds of times coaching traders through our Net Alpha program. The strategy is solid. The edge is real. But the sizing? Complete afterthought.
Here's the truth: position sizing is the single most important decision you make on every trade. Not your entry. Not your indicator. The size.
Why Position Sizing Matters More Than Your Setup
Think about it this way. You could have a 70% win rate strategy — backtested, verified, the works — and still blow your account if you're risking 10% per trade. Four losers in a row (which absolutely will happen) puts you down 40%. Now you need a 67% gain just to get back to breakeven.
Meanwhile, a trader with a 55% win rate risking 1% per trade? They sleep fine. Fo...