Stop loss
Updated 2026-09-20
Definition
An order that automatically closes a losing position at a preset level, to limit risk.
Why it matters
It should always be set when you open, at the point where the idea is invalidated and not where it suits you. It shouldn't be moved away when price approaches. With a stop the maximum loss is known before you enter.
Practical example
You buy at 1.1000 with a stop at 1.0975: you risk 25 pips. With 0.20 lots that's about $50.
Learn more
Course lesson: Order types: how to enter, exit and protect yourselfRelated entries
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Educational content, not financial advice. Trading involves risk.