What is Stop Loss?

A pre-set order that closes a losing trade automatically — the only real insurance in trading.

A stop loss is an order placed with your broker to close a position automatically once price reaches a level you chose in advance. It converts a potentially unlimited loss into a defined, planned expense. Professionals place the stop where the trade idea is proven wrong — behind the swing level, order block or structure that justified the entry — never at a random pip distance or a round number chosen for comfort.

The stop loss also anchors every other number in a professional trade: the distance from entry to stop defines one unit of risk (1R), which sets the position size and gives targets their meaning (a 3R target is three stop-distances away). Trading without a stop is not confidence, it is exposure to a single opinion with no exit plan. Moving a stop further away mid-trade is the same mistake made twice.