Stop-loss
a.k.a. Stop, SL
An order that automatically closes your trade at a set price to cap how much you can lose.
A stop-loss is an instruction you leave with your broker: "if price reaches here, get me out." It turns an open-ended risk into a known one.
You decide the exit while you are calm, not in the middle of a red-candle panic. Place it where your trade idea is proven wrong, then size your lot so that hitting the stop costs only what you can afford.
Stops are not perfect. In a fast market the fill can come a few pips worse than your price, which is called slippage. But a slightly messy exit beats no exit at all.
Capping the damage
- Buy EUR/USD at 1.0850 with a mini lot ($1 a pip).
- Stop-loss at 1.0820: 30 pips below entry.
- Worst case if the stop is hit cleanly: 30 × $1 = $30.
Bottom line: You know your maximum loss before you click buy.
Moving the stop further away as price approaches it. That turns a small, planned loss into a big, unplanned one.
Keep this word for good
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