Definition of Stop Loss (SL)
An order placed to automatically close a losing trade at a predetermined price level, limiting the maximum loss. Stop losses are the most important risk management tool and should be used on every trade.
At a glance
Term
Stop Loss (SL)
URL slug
stop-loss-sl
Category
Risk & capital
Short answer
An order placed to automatically close a losing trade at a predetermined price level, limiting the maximum loss.
Deep dives
/blog/how-to-set-stop-loss-take-profit-forex/, /tools/lot-calculator/, /blog/forex-risk-management-guide/
Example
Example: $1,000 equity and 1% risk = a $10 cash cap. Size from “Stop Loss (SL)” and stop distance, not from a gut-feel lot size.
Common mistake
Common mistake: confusing “Stop Loss (SL)” with advertised max leverage — leverage alone does not set risk per trade.
Professional tip
Tip: write a cash daily loss limit independent of “Stop Loss (SL)”, then let the definition set size only inside that ceiling.
Related deep dives
Practice tools:
Related terms
FAQ
An order placed to automatically close a losing trade at a predetermined price level, limiting the maximum loss.
“Stop Loss (SL)” sits inside capital protection. Ignoring it turns leverage and margin from tools into a path to rapid loss.
Common mistake: confusing “Stop Loss (SL)” with advertised max leverage — leverage alone does not set risk per trade.