The same constructed entry and target with stops beneath two different structures. The comparison explains invalidation and planned risk, not realized performance.
Watch on YouTube ↗A nearer stop needs a reason beyond making the reward-to-risk ratio look better. After a breakout and retest, the chart may contain two reasonable failure points. Choosing between them means deciding which buying idea the trade depends on.
The lesson begins with an old ceiling and a base below it. Price breaks the ceiling, returns and produces a completed buying response. The entry qualifies under this example's rule, but that still leaves a decision about the loss the trader is prepared to accept.
The whole return matters
Buyers may see the old ceiling as an opportunity after the break. Existing shorts may also buy to close. If price holds the return and moves up again, we can observe a higher low. The candles show the response without revealing the participants or proving that buying will persist.
The local idea depends on this retest holding. A stop below its low fits that premise because a decline through it would remove the support just observed. The broader idea allows the local return to fail while an earlier recovery base remains intact. Its stop belongs beneath that deeper structure.
These are different expectations. A local stop can end a trade while the broader recovery survives. Giving price more room also leaves a greater price distance at risk when the entry stays the same.
The confirmation candle isn't always the stop reference
In the source, the whole retest reaches 98.7, while the confirmation candle's low is 98.9. A stop placed between those lows could be reached even though the whole retest still holds. The candle that supplies the trigger doesn't have to supply the lowest point of the structure being defended.
The example puts the local stop at 98.5, below the whole return. That small buffer is an authored choice. Another instrument's spread, volatility and execution conditions could make the same numerical buffer unsuitable.
The entry is 100 and the planned target is 103 at an earlier selling area. With the local stop, 1.5 units are at risk for 3 units of possible reward, or 2R before costs. A deeper stop at 96 risks 4 units for the same 3-unit reward, or 0.75R.
The target doesn't move because the stop changes
Selling could return near 103 because price stalled there before. Existing holders might take profit and new sellers might act. Those are possible motives, not orders visible in the chart. Neither stop removes that obstacle or makes the target certain.
The better displayed ratio doesn't tell us which stop produces better results over repeated trades. The closer stop may suffer more exits during fluctuations. The deeper stop may tolerate moves the local plan considers a failure. Keeping the same planned cash risk also requires adjusting position size when stop distance changes.
The source video, published October 18, uses constructed candles and compares plans without a realized trade result. Choose the premise before comparing the ratio, then assess whether the available room meets that plan. Moving a stop later is a separate decision that requires its own confirmation rule.