Stop-loss

A stop order used to limit loss by exiting when the trade is invalidated or risk limit is hit.

1 min

Why it matters

Stops are how you keep one trade from becoming a life event.

Trading use: the point is not vocabulary. The point is prediction: what changes when this shows up?

Common trap

Placing stops at comfort levels instead of invalidation.

Example

A tight stop gets tagged by noise repeatedly, causing churn and costs.

Operational cue: if you can’t point to it on the chart, in the DOM, or in your broker logs, treat it as a story and trade smaller.

Notes

Stop placement is inseparable from sizing.

If you see this repeatedly, you are in a different regime than your model assumes.
Regime change usually means position size change.
When in doubt: trade smaller, or don’t trade.