A stop-loss order is a trading tool that is used by traders to limit their potential losses in a trade. It is an automatic order that is placed with a broker to sell or buy security once it reaches a certain price point. When a stop loss order is placed, it sets a predetermined level at which a trader will exit a trade if the market moves against them. For example, if a trader buys a stock at $50 per share and places a stop loss order at $45 per share if the stock price drops to $45 or below, the stop loss order will be triggered and the stock will be sold automatically. This helps to limit potential losses and protect a trader's capital. Stop-loss orders are particularly useful for traders who are unable to monitor the market constantly, as they provide a safety net in case the market moves against their position.

A stop loss order is a risk management tool used by traders to limit potential losses on an investment. It works by automatically triggering a market or limit order when the asset’s price reaches a predetermined level. For example, if you buy a stock at $50 and set a stop loss at $45, your position will be sold once the price falls to that point. This prevents further losses if the market moves against you. Stop losses are useful in volatile markets where price changes happen quickly. They also help traders stick to their strategy and avoid emotional decisions. While not foolproof, since sudden gaps can lead to execution at worse prices, they remain essential for disciplined trading.