An order that automatically closes your trade at a predetermined loss level — your first line of survival.
A stop loss is a pre-set order that closes your position automatically when price hits a certain level against you. You set it the moment you enter the trade. If price goes there, the broker closes you out — no hesitation, no hope, no "it'll come back."
Stops are not optional. They are the single most important tool in trading. Every pro has a stop on every trade, without exception. The stop is what turns trading from gambling into business: it caps your worst-case loss to a known, survivable number.
Stops go behind the level that invalidates your trade idea, not at a random dollar amount. If you went long because price held support, your stop goes below that support. If the support breaks, your idea was wrong — and you want out.
A trader who went long Swiss franc in Jan 2015 without a stop lost 100% of their account in 15 minutes. One who had a tight stop at 5% risk lost... 5%. Stops are the difference between a bad day and a career-ender.
Frequently asked about stop loss
What is a stop loss in trading?+
An order that automatically closes your trade at a predetermined loss level — your first line of survival.
When will I see stop loss used in real trading?+
Before you enter EVERY trade. "Stop loss placed" should be the second thing you do, after "entry confirmed."
What is the most common mistake traders make with stop loss?+
Moving the stop further away when price gets close. This is called "widening the stop" and it's how small losses become account blowups. Never widen. Ever.
What do experienced traders know about stop loss that beginners don't?+
Set the stop BEFORE you calculate position size, not after. Stop distance determines position size, not the other way around. If the stop needs to be 50 pips wide, reduce position size until the dollar risk stays within your 1-2% rule.
Read the lesson here. Mark the chart on TradingView. Compare brokers with the checklist.
TradingView is the chart workspace most learners already recognize: watchlists, alerts, drawings, and clean multi-market charts. Broker research stays methodology-first: jurisdiction, costs, platform, withdrawals, and risk before any account decision.