Risk
What is Stop-loss?
By the verify.trading team · Last reviewed · How we write
A stop-loss is an order that closes a trade automatically when price reaches a level you set, limiting how much the trade can lose.
Key points
- Place it where the idea is invalid, not where the loss feels affordable.
- Size the position from the stop distance.
- Not a guaranteed price.
Stop-loss explained
Set the stop where your trade idea is proven wrong, based on market structure, and then size the position so that a stop-out costs an amount you accepted in advance.
In fast markets a stop can fill at a worse price than planned (slippage), and over a weekend gap it may fill well beyond the level. A stop is a plan, not a guarantee.
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