Stop-Loss

A stop-loss is an instruction triggered when price reaches a chosen level. A stop-market order then seeks an immediate exit; a stop-limit order instead places a limit order and may remain unfilled. For a long, the trigger normally sits below entry; for a short, it normally sits above.

For example, a 2% stop below a $64,000 long entry triggers at $62,720. On 0.0781 BTC, the planned price loss is about $100 before fees and slippage. That quantity comes from position sizing, not from the stop order alone.

The stop's role in planned risk

The stop distance can define planned loss and make risk comparable across trades. It does not define every possible loss. Investor.gov's stop-order bulletin notes that the stop price is a trigger rather than a guaranteed execution price and that venue trigger standards can differ.

Placement

Possible placement rules include a fixed percentage, a price structure level, or a multiple of ATR:

long stop = entry − k × ATR

No value of k is universally correct. A wider stop changes holding time and, under stop-based sizing, reduces quantity. The placement rule should match the tested premise and be included in the parameter search record.

Execution reality

A common misconception is that a stop guarantees the planned loss. A gap can put the first executable price beyond the trigger, and thin depth can worsen the average fill. A stop-limit avoids an unrestricted market order but introduces non-execution risk. These are different trade-offs, not interchangeable labels.

On AlphaProve

AlphaProve accepts ATR, percentage, and fixed-price stop rules. Its candle fill path uses finer one-minute data where available and can apply an additional stop-slippage assumption; when a stop and take-profit are both reachable within an unresolved bar, the bracket uses the configured conservative stop-first ordering. The tearsheet records exit reasons. The historical article nine ways to place a stop compares fixed, ATR, trailing, and break-even stops under one disclosed study design.