Risk

What is Stop Loss?

An automatic sell order if a stock drops too much

Full Explanation

You set a stop loss at, say, 10% below your buy price. If the stock drops that much, it sells automatically so you don't lose more.

Pro Tip

Stop losses are a core risk tool for active traders. Long-term investors often skip them intentionally — different strategies, different rules. Know which style fits you.

Related Risk Terms

Correlation

How closely two investments move together

Short Selling

Betting that a stock will go down

Position Sizing

Deciding how much of your money to put in one stock

Diversification

Not putting all your eggs in one basket

View all Risk terms →

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