Glossary
Stop Loss
A pre-set order that closes a losing trade at a defined price, capping the loss.
Stop Loss, explained
A stop loss is an order that automatically closes your position once price reaches a level you set, limiting how much a single trade can cost you. It is the foundation of survival in trading — the difference between a controlled loss and an account-ending one.
The best stops are structural, not arbitrary: placed beyond a level that, if broken, genuinely invalidates the trade idea (the far side of an order block, beyond a swing high or low). A stop that sits where you can afford it rather than where the idea breaks is a stop in the wrong place.
Stop placement and position sizing are two halves of one decision. You first decide where the stop must sit for the idea to be valid, then size the position so that distance equals your fixed dollar risk. Reversing the order — picking a comfortable size first and squeezing the stop to fit — is how traders end up stopped out by normal noise.
Moving a stop further away to avoid being stopped out is one of the most expensive habits in trading. The stop defines the trade's risk; widening it mid-trade quietly breaks your entire risk plan and turns a planned small loss into an unplanned large one.
On the desk every signal ships with a stop already defined, precisely so the loss is decided before emotion enters. A common refinement is to trail the stop to break-even once the trade has moved a set distance in your favour, removing the risk while leaving the upside open.
Frequently asked questions
- Where should I place my stop loss?
- Beyond the level that would prove the trade wrong — past a swing high/low or the far edge of an order block — not at a round dollar amount. Then size the position so that distance equals your planned risk.
- Should I ever move my stop loss?
- Move it only to reduce risk (e.g. trailing to break-even as the trade works), never further away to avoid being stopped out. Widening a stop mid-trade breaks the risk plan you entered with.
- Can a stop loss guarantee my exact exit price?
- No. A standard stop becomes a market order when hit, so in fast markets it can fill worse than your level (slippage). Only a guaranteed stop, where offered, locks the exact price — usually for an extra fee.
Related terms
Take Profit
A pre-set order that closes a winning trade at a target price, locking in the gain.
ReadRisk-Reward Ratio
How much you stand to make versus how much you risk on a trade — the core of long-term profitability.
ReadPosition Sizing
Deciding how large a trade to take so that a loss costs a fixed, pre-planned amount.
ReadOrder Block
The last opposing candle before a strong, displaced move — a zone where institutions absorbed flow.
Read
Put it into practice
Education modules
More terms in the glossary.
Vocabulary is the easy part. See how the desk turns these concepts into structured trades with defined risk on every position.