SL90 & Smart Stop — Stop Loss Parameters
What are SL90, Smart Stop (SLm), and SLmin?
DCMM provides multiple stop-loss levels that define the risk side of each trade setup. These are derived statistically from Historical Twins, ensuring that stops are positioned based on actual historical behavior rather than arbitrary technical levels.
SL90 — 90th Percentile Stop Loss
SL90 is the 90th percentile maximum drawdown seen in Historical Twins over the next session (D+1). In practical terms, it represents the level below which only 10% of historical twins traded — making it a conservative, wide stop that is rarely triggered by normal price noise.
SL90 is expressed as a percentage decline from the current price. The SL90 Price column shows the actual price level.
Use SL90 when:
- You prefer wider stops with higher survival probability
- The stock is volatile and prone to intraday swings
- You want to hold through short-term noise
Smart Stop (SLm) — The Primary Stop Loss
Smart Stop (labeled as SLm in the detailed view) is the DCMM-recommended stop loss level. It is calculated as the statistical “smart” stop — the point below which the drawdown pattern deviates significantly from normal historical behavior, suggesting the setup has failed.
Mathematically, SLm is positioned to capture most normal price fluctuations while clearly invalidating the setup if breached. It typically represents a tighter stop than SL90 but is more accurate in identifying when the mean-reversion thesis is no longer valid.
The Smart Stop Price column shows the actual price level for the current session.
SLc — Conservative Stop Loss
SLc is a slightly wider version of SLm, providing a conservative stop that accounts for higher-volatility regimes. SLc Price shows the corresponding price level.
SLmin — Minimum (Tightest) Stop Loss
SLmin is the tightest available stop, representing the minimum level that still maintains historical validity. It is used for traders who want to minimize risk per trade at the cost of higher stop-out frequency.
The SLmin Price column shows the actual price level.
SL_year — Annual Stop Loss
SL_year is the stop loss derived from the full annual historical analysis, calibrated to the yearly cycle context. It defines the maximum acceptable risk for longer holding periods.
Choosing the Right Stop Loss
| Stop Type | Risk Level | Best For |
|---|---|---|
| SLmin | Lowest risk per trade | High-volume day traders, tight risk management |
| SLm (Smart Stop) | Balanced | Primary recommendation; swing traders |
| SLc | Moderate-wide | Higher volatility environments |
| SL90 | Wide stop | Position traders; volatile names |
| SL_year | Annual context | Multi-week position traders |
Stop Loss and R/R Ratio
Every stop loss level is automatically paired with the corresponding take-profit in the DCMM R/R calculation. The primary R/R Ratio uses TP_year / SLm (Smart Stop). Traders can also compute their own R/R using any combination of TP and SL levels shown in the dashboard.