JoymistaWhat Is a Stop-Loss?
A stop-loss is an order that closes your trade automatically at a price you set in advance, to cap your loss if price moves against you.
Explained
A stop belongs where the trade idea is proven wrong, such as beyond a swing low or a support zone, not at a random distance. The right trade size is then worked out from that distance. In sharp moves or gaps a stop can fill at a worse price.
Example
Example with made-up numbersYou buy at 1.1000 with a stop at 1.0950, risking 50 pips. At 0.2 lots the most you lose is 50 × 2 = 100 dollars.
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Related terms
- Take-ProfitA take-profit order closes your trade automatically at a target price you set in advance,…
- Position SizingPosition size comes from the amount you accept to lose: size in lots = risk amount ÷…
- Trailing StopA trailing stop is a stop-loss that follows price at a fixed distance when it moves in…
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Open in JoymistaEducational content, not investment advice.