Stop-Loss Beyond the Distal Line
The invalidation logic
If price closes beyond the distal line, all the pending orders in the zone have been consumed and the zone is broken. There is no reason to remain in a trade that has violated its premise. The stop sits just beyond this invalidation point.
Why 'just beyond' not exactly at
A stop placed exactly at the distal can be triggered by a one-tick spike and still have price reverse back. A small buffer of a few points (or a percentage of the zone's range) absorbs normal noise without meaningfully increasing risk.
Risk distance
The gap from your entry (near proximal) to your stop (just beyond distal) is the risk per unit. This number drives every position-sizing decision. Write it down before sizing the trade.
Never widen the stop
Once a stop is placed, it should only ever move in the trade's favour (trailing). Moving a stop further away to avoid being stopped out is emotional risk management — it converts a defined-risk study into an undefined loss.
Practice checklist
- Stop placed just beyond distal line before entering
- Add a small, consistent buffer (e.g., 0.5% of zone range)
- Measure risk distance: Entry price − Stop price
- Never move stop further away once set
Mistakes to avoid
- Placing the stop inside the zone — price will spike in and stop you out constantly
- Moving the stop wider to 'give it more room' — this is emotional, not strategic
- Forgetting to set the stop before price arrives at the zone