Loss aversion and the urge to nudge the stop
Posted: Sat Oct 31, 2026 8:08 pm
A stop is set at a sensible level. Price approaches it. The hand reaches for the mouse and moves it a couple of pips further away. This is loss aversion in action.
Humans feel losses roughly twice as strongly as equivalent gains. Faced with a trade about to lose, the mind looks for reasons to give it more room. Almost every trader has done it, and the result is usually a bigger loss.
Moving a stop against the plan breaks the whole risk framework. The size was calculated for a specific distance. Increasing that distance increases the risk beyond what was accepted.
Tools that help include setting the stop at order entry and never touching it in the adverse direction, using a platform setting that locks the stop in place, or entering orders with a script that enforces the rule.
Tracking how often stops were widened, and how those trades ended, gives a convincing record.
The honest figure is usually unpleasant.
A cleaner approach is to treat the stop as part of the entry, not as a separate decision. The order goes in with both levels attached, and the only edit allowed afterwards is tightening, so there is nothing to negotiate when the market gets uncomfortable.
How often do you move a stop away from price, and how did those trades end?
Humans feel losses roughly twice as strongly as equivalent gains. Faced with a trade about to lose, the mind looks for reasons to give it more room. Almost every trader has done it, and the result is usually a bigger loss.
Moving a stop against the plan breaks the whole risk framework. The size was calculated for a specific distance. Increasing that distance increases the risk beyond what was accepted.
Tools that help include setting the stop at order entry and never touching it in the adverse direction, using a platform setting that locks the stop in place, or entering orders with a script that enforces the rule.
Tracking how often stops were widened, and how those trades ended, gives a convincing record.
The honest figure is usually unpleasant.
A cleaner approach is to treat the stop as part of the entry, not as a separate decision. The order goes in with both levels attached, and the only edit allowed afterwards is tightening, so there is nothing to negotiate when the market gets uncomfortable.
How often do you move a stop away from price, and how did those trades end?