Stop Loss
Stop Loss — A pre-set price at which a losing position is automatically closed to limit further losses.
- Quick definition: A pre-set price at which a losing position is automatically closed to limit further losses.
- Category: Order Types
Full Definition
Stop loss is the most important order type in trading. A trade entered at 1.0820 with a stop at 1.0800 caps the loss at 20 pips. Stops can be set in pips, in $ amount, or as a multiple of ATR. Pro traders never trade without a stop — even a 0.5% adverse move on a leveraged position can be catastrophic. Many prop firm failures come from disabling stops or moving them further away.
Related Terms
ATR (Average True Range) · Take Profit
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