Put the stop where your risk says it belongs — then read the 1R / 2R / 3R targets the trade must reach to be worth taking.
"R" is your risk unit — the dollar distance from entry to stop. Thinking in R keeps every trade comparable: a 2R winner pays for two 1R losers regardless of coin, leverage or position size. A strategy that wins only 40% of the time is still profitable if the average winner reaches 2R.
Both, in order: first find the structural level that invalidates the trade (below support for longs, above resistance for shorts), then size the POSITION so the dollar loss at that level equals your risk number. If the position gets too small to matter, the setup is too wide — skip it rather than tightening the stop into noise.
It only means something next to your win rate: breakeven R:R = (1 / win rate) - 1. A 50% win rate breaks even at 1:1, a 33% win rate needs 2:1. Most swing systems aim for at least 2R average winners so an ordinary win rate still compounds.
A stop-loss becomes a market order when touched, so in fast moves or thin books it fills with slippage. On MarginPad paper trades stops settle on candle closes with confirmation, and on real exchanges you can use stop-limit orders to bound slippage at the cost of possibly not filling.
Free, no signup, runs entirely in your browser. Educational tool — not financial advice. Practice the setup risk-free on the MarginPad paper-trading terminal before putting real money behind it.