A stop loss is anthat automatically closes your trade at a specified . This works as a safety stop to reduce risks, protecting your in the event that the trade does not work out.
Stop losses are also sometimes called "stop orders" or "stop market orders".
To learn how and where to place stop losses, read our lesson:
We also have a tutorial on how to place a stop loss on MetaTrader 4:
Example of using a stop loss
Say you traded— you could set a stop loss order with your broker so that if the price you paid on your falls by 5 , your order would immediately stop out, limiting your loss to a 5 pip loss. Setting the stop loss at 10 pips would similarly limit your risk to a 10 pip loss if the paid price drops by 10 pips.