Glossary › invalidation

Trading glossary · risk

invalidation

The price that would prove your trade idea wrong, where you should get out.

The fuller meaning

The level or condition at which a trade idea is proven wrong, such as a close below a hammer's low or back above a double top's peaks. Traders set it before entry and place the stop there; writing it down counters confirmation bias and anchoring.

invalidation.

Related words

1% rule · ATR stop · average loss · average win · breakeven · breakeven win rate · correlation · daily loss limit · drawdown · equity curve