What is Stop Loss?

What is Stop Loss

Stop loss (S/L) or stop loss order is a very useful tool for traders to limit their losses. The market is sometimes highly volatile and one can never be sure what is going to happen after they place an order, so traders use this strategy in order to protect themselves from losing a huge amount. Majority of forex brokers offer this type of order as it helps a trader to control their risks by stopping their trade at a predetermined limit before it gets too late. When the prices of the security you traded with goes in the opposite direction of what you expected then, if you have placed a stop loss order a little further, either above or below depending on your position, than your actual trade price, your order will automatically close once the price reach your stop loss saving you from losing more than you can afford.

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