Trade Invalidation
Trade invalidation is the market condition or price level that causes the original reasoning behind a trade to no longer hold.
Why it matters to you
A stop should ideally have a reason. Instead of asking: "Where can I put my stop so I don't lose much?" the trader asks: "At what point is my trade idea wrong?" Once that level is identified, position sizing can be used to control how much money is at risk.
Terms that sit next to this one
See the perpetuals front
The tools, the live market and the course.