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Trading glossary

What is Stop Loss?

Order TypesBeginner

A stop loss is an order that automatically closes your trade when the price falls to a level you set, limiting your potential loss. For example, if you buy a stock at £10, you might set a stop loss at £9.50 to cap your loss at 5%. Every serious trader uses stop losses — it's the most important risk management tool.

Related terms: Take Profit Trailing Stop Risk/Reward Ratio Position Size

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