Placing the stop and the target

A stop is not an amount you agree to lose. It is the price at which your scenario becomes wrong. If you buy an absorption at 7,590, your idea is that sellers will not get below the zone; the stop therefore goes just below the zone, the place where, if price gets there, you know you were wrong. A stop placed at “10 points because it is a round number” means nothing: it is either too tight (taken out by noise) or too wide (a bigger loss than necessary).

The target follows the same logic: it goes where the market has a reason to react, not where you would like to make a round sum.