Stop-Loss

Risk Management

An order that automatically closes a losing trade at a preset price, capping how much you can lose on that position.

A stop-loss is an order that automatically closes a trade once the price reaches a predetermined level, limiting further losses if the market moves against you. It's one of the most fundamental risk-management tools in trading, letting you define your maximum acceptable loss before you even enter a position. In fast or illiquid markets a stop-loss can still suffer slippage and fill at a worse price than set, unless it's a guaranteed stop (usually offered for an extra fee).

Related terms

Drawdown Slippage Take-Profit

More in Risk Management

Aggregate Currency Exposure Analysis Paralysis Anchoring Bias ATR-Based Position Sizing Black Swan Event Calmar Ratio Confirmation Bias Correlation Hedging Cross Hedge Daily Loss Limit Decision Fatigue Drawdown

After Stop-Loss

CalculatorPosition Size CalculatorSize your position from your account balance, risk percentage and stop-loss distance — the core risk-management calculation.GuideMargin Calls and Stop-Outs ExplainedBalance, equity and margin level explained — how a margin call differs from a stop-out, which position closes first, and when a gap outruns the system.

← Glossary