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Why you should use a Stop Loss

Stop loss orders are highly recommended because they are easy to use and helps protect the trader from excessive risk taking and losses.

What is it?

Stop loss order is an order gets executed to buy or sell once the asset reaches the preset price. The key usage of this is to reduce the amount of loss on a position.

Suppose you bought 1 micro lot of GBP/USD at 1.5810. According to your risk management strategy, you may place a stop loss at 1.5800. If market moves against you and price drops to 1.5800, this order gets activated and the brokerage will sell your lot at the current market price. This may or may not be 1.5800, but it should be close, barring extremely volatile conditions.

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