A stop controls execution, not maximum loss.
| Concept | Explanation | |---|---| | Price stop | Exit or reduce after price reaches a specified level. | | Volatility stop | Uses ATR or another volatility measure. | | Time stop | Exit if the expected move does not occur within the planned horizon. | | Thesis stop | Exit when fundamental or contextual evidence fails. | | Trailing stop | Moves with favorable price action. | | Alert level | Prompts review without automatically trading. |
A stop-loss controls execution, not maximum loss. Gaps, slippage, thin liquidity, and venue outages can produce a worse exit.