What is Stop Loss?
A stop loss is the price at which you exit a losing trade, decided before you enter. It is usually placed with a stop order so the exit does not depend on willpower. A stop limits the planned loss but does not guarantee the exit price, because fast markets and gaps can fill it worse.
Why Stop Loss matters
The distance from entry to stop is what turns a risk budget into a position size.
Related terms
Lessons that use this term
- Risk management basics for traders
- Position sizing: how many shares or contracts to trade
- Order types 2: stop, stop-limit, and brackets