Risk and money
What is a stop loss?
A stop loss is an order that closes your trade at a price you pick ahead of time, so a losing trade stops at a size you planned.
It is like deciding before a game how much you are willing to spend at the arcade. When you hit that number, you stop.
A good stop goes where your trade idea would be proven wrong, not at a random number of pips.
Stops are not perfect. In fast markets price can jump past your stop, which is called slippage. That is why position size matters too.
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This is taught in Grade 4: Risk Camp.
Words to know
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Reviewed 2026-10-04. Education only, not financial advice. Trading involves risk of loss.