Glossary
Stop-Loss
Risk Management
A stop-loss is a resting order that closes a position automatically once price reaches a predefined level, capping the loss on that trade.
Stops are placed where the trade idea is invalidated — beyond a swing high or low, or a volatility multiple such as 1.5x the Average True Range — rather than at an arbitrary cash figure.
A standard stop guarantees execution but not price: in a gap or fast market it fills at the next available level, which is slippage. A guaranteed stop-loss order fills at the exact level for a premium. Combining a stop with correct position sizing is what bounds worst-case loss per trade.