Stop Loss Order

A stop loss order automatically exits a position when the price reaches a predetermined level. It's the most fundamental risk management tool in trading. Without stop losses, a single bad trade can wipe out months of gains.

• Stop Market — Triggers a market order when stop price is hit. Guarantees execution but not price.
• Stop Limit — Triggers a limit order when stop price is hit. Guarantees price but not execution.
• Trailing Stop — Moves with the price, maintaining a fixed distance. Locks in profits as price rises.
• Placement — Common approaches: below support levels, below moving averages, or a fixed percentage (2-5%).
• Risk-reward ratio — If your stop loss risks $1 per share, your target should gain at least $2 (2:1 ratio).