Risk Management

Stop-Loss

A predefined instruction to automatically exit a position once the price reaches a specified unfavorable level, limiting further loss.

A stop-loss is a predefined instruction to your broker to automatically exit a position once the price reaches a specified, unfavorable level, limiting further loss beyond that point. It can be placed as a stop-loss market order (prioritizing guaranteed execution) or a stop-loss limit order (prioritizing price control).

See how to set one thoughtfully, with worked examples, in Stop-Loss Explained: How to Protect Your Trading Capital.