Stop-loss
An order to sell automatically if the price falls to a level you chose in advance, to limit the loss.
In plain English
Before the trade, you decide how much you are willing to lose. The stop-loss sells for you when the price gets there, so you don't have to make that decision in a panic.
Uncle Gary explains
Uncle Gary's rule at the casino: when he is down $50, he goes home. That is a stop-loss. Gary has never once followed it.
Why it matters for your money
A stop limits the damage from one trade. It does not turn a bad strategy into a good one.
Where we tested it
- Does Buying the Dip Work? We Checked Which Dips
- Does a Stop-Loss Protect Your Money? We Tested Tight and Wide Stops
Related terms
All glossary terms. Educational content, not financial advice.