Definition
A stop-loss sits in the market as a standing instruction: if the price reaches this level, sell (or buy back) and take the loss. It turns "I will get out if it goes against me" from a promise into a mechanism — one that works while you sleep, and one that does not negotiate.
Where to place it is a technical decision: beyond the level that would prove the trade idea wrong, not at a round number of pips. How much it is allowed to cost is a risk decision made through position sizing. The two together are the whole of risk management for a single trade.
Example
You buy gold at 2,400 because it bounced from support at 2,390. The stop-loss goes at 2,385, just below the support — if price trades there, the reason for the trade is gone.
Common questions
Is a stop-loss guaranteed to fill at my price?
A standard stop-loss becomes a market order when triggered, so in a fast or gapping market it can fill worse than the level (slippage). Some brokers sell guaranteed stops for a premium.
Should I move my stop-loss?
Toward the entry or into profit, as the trade works — yes, that is a trailing stop. Further away, to avoid taking a loss — no; that is the behaviour the stop exists to prevent.
Related terms
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Part of the academy's trading glossary. All terms · Updated 17 October 2026