What is Stop Loss?

What is Stop Loss?

What is Stop Loss

In forex trading there are different strategies and tools available to make use of while going for a trade. One of those tools which is very useful for traders when placing an order is the stop loss (S/L). It is a function offered by forex brokers to limit your losses in order to protect yourself from losing too much of your capital. While placing an order you can fix a limit at which your position will automatically close in case of unfavorable conditions. It is an effective strategy used by many forex investors to decrease their chances of losing more than they can afford. For example, if you place an order for buying a security at a particular price, you can place a stop loss some prices below the price at which you bought so that if the market goes down contrary to your expectations you only lose the amount which you can handle.

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