What Is A Stop Loss Order?

A stop-loss order is a type of advance order that allows you to automatically exit a position in order to limit losses and reduce risk exposure when price movements are more adverse than you are willing to accept. Sometimes called a stop loss, stop order or stop market order, this tool is an automatic instruction to sell an open position when the price drops to a pre-set losing limit, ensuring your losses do not grow too big. As stop loss is a standard free feature of all trading platforms, it’s one of the most important risk management tools in a forex trader’s armoury to mitigate against losses.