Stop Loss

What is a Stop Loss?

A stop loss is a preset order that automatically closes a trade when the price moves against you to a certain level. It helps limit your losses and manage risk.

Stop Loss Example

Suppose you buy EURUSD at 1.10201, expecting the price to rise. You set a stop loss at 1.10001.

• If the price goes up, you may make a profit.
• If the price falls to 1.10001, your trade will close automatically, limiting your loss.

This simple feature makes stop loss one of the most important tools for risk management in trading.

Why is Stop Loss Important?

• Protects your trading account from large losses
• Removes emotional decision-making
• Allows you to plan your trades with clear risk levels

In short, a stop loss in forex or CFD trading is like a safety net that ensures you never lose more than you are prepared to.