Who this is for — Traders who place stop at the pip on invalidation and get shaken out, or skip stops and «close manually».
The technical stop translates invalidation into a real order: logical level + buffer (ATR, spread, slippage) to survive noise. Size adjusts to stop → entry distance.
In plain terms — Invalidation = «I'm wrong here»; technical stop = «I exit here» with breathing room — smaller size if room widens risk.
Technical stop components
| Layer | Content |
|---|---|
| Invalidation | Structural level (HL, support, etc.) |
| Volatility buffer | e.g. 0.5–1 × ATR |
| Slippage/spread | Extra on illiquid assets or news |
Wider stop + smaller size = same risk %.
Operating rules
- Stop defined before entry
- Never move stop away from invalidation
- Move to BE only with written rule (e.g. +1R)
Typical mistake — Tight stop to «feel less» loss → frequent exit + implicit oversize on revenge.
Example — Long: invalidation below HL at 100; ATR 2 pt → stop at 97.5; 1% risk → size from 2.5% distance.
Summary sheet
- ≠ arbitrary dollar stop.
- Buffer: noise, not excuse for far invalidation.
- Order: platform stop loss mandatory.
Silver path — Setup module. Index: Silver path.