Most traders set their stop loss based on a number they can tolerate losing, not based on where the market tells them they are wrong. That is the real reason the stop always gets hit.
When you place a trade, you have a mental picture of how much you are willing to lose. You calculate the lot size, see the rupee amount, and feel an emotion about it. That emotion, not the chart, sets the distance. The result is a stop that is either too tight (gets hit by normal noise) or too wide (the actual risk is far beyond what you calculated).
A stop placed from emotion is a stop placed in the wrong place. The market does not know or care what you can afford to lose. It moves based on structure, liquidity, and order flow. Your stop needs to be placed relative to where the trade idea is invalidated, not relative to your account balance.
A properly placed stop loss is below the last significant structural low on a long trade, or above the last significant structural high on a short trade. It is placed at the level where, if price reaches it, the original setup is no longer valid. Not at the level where you feel the loss.
If the correct technical stop distance gives you more rupee risk than your position sizing allows, the answer is not to move the stop. The answer is to reduce the position size or skip the trade entirely.
The moment a trade goes against you, loss aversion activates. The mind does not want to crystallise the loss. So it generates reasons to move the stop. "It just needs a little more room." "The level might hold one candle lower." "I will give it until the close." Each of these is the mind negotiating with the plan, and the plan always loses that negotiation.
The fix is not more willpower. It is a written rule: the stop does not move in the direction of the loss, ever. Only in the direction of profit, if you are trailing after the trade moves in your favour.
Setting the stop correctly and then sizing the position so the rupee risk matches your defined risk percentage (1% to 2% of capital for most traders) is the full framework. The stop placement is the chart work. The position size is the math. Neither works without the other.
A 200-point stop on Nifty with 5 lots is a very different risk than a 200-point stop with 1 lot. The stop distance is the same. The risk is not. Getting this right every time is what separates a plan from a hope.
Educational content only. Nothing on this site constitutes investment advice or a recommendation to buy or sell any security. Trading involves risk of loss.