When Should You Exit A Trade Before Your Stop Is Hit?
You set a stop for a reason. So exiting before it’s hit feels like breaking your own rules. Sometimes it is. But sometimes the trade stops behaving the way your setup requires, and waiting for the stop just costs you more. The difference between the two isn’t a feeling — it’s measurable. And most traders never define it, which is exactly where the trouble starts.
Why would you close a position while your stop still sits untouched? Because your stop defines maximum risk, not the moment your reasoning breaks down. Those are separate questions.
Your stop marks the price where the technical premise is definitively wrong. An early exit answers something different: has the setup stopped doing what you expected it to do? A breakout that snaps back into its range hasn’t hit your stop, but it’s no longer the trade you entered.
Shane Daly, NetPicks Options
Author
Category: Options Trading Strategy
