Stop loss
Also known as: stop-loss order, SL
Stop loss: A stop loss is an order that closes a position automatically if the price moves against you to a set level. It is designed to limit the loss on a trade, but it does not guarantee the exit price.
How a stop loss works
For a long position the stop sits below the entry price and, on most retail FX platforms, is triggered by the bid; for a short position it sits above the entry and is triggered by the ask. Once triggered, it typically becomes a market order, so in a fast or gapping market the position can be closed at a worse price than the stop level (slippage).
Stop loss and position size
The distance to the stop, the pip value and the amount you are prepared to lose together determine the position size — see the position size calculator.
Guaranteed stops
Some brokers offer guaranteed stop-loss orders that close at exactly the stop price. They are not common across forex brokers, are often limited to certain CFD products and usually carry a fee.
Example
Buy EUR/USD at 1.0850 with a stop loss at 1.0825: if the price falls 25 pips, the trade closes.
Learn more
- Forex Order Types: Market, Limit, Stop and More Explained
A guide to forex order types — market, buy/sell limit, buy/sell stop, stop-limit, stop loss, take profit, trailing stop and OCO — with examples.
- How to Start Forex Trading: A Step-by-Step Guide for Beginners
How to start forex trading safely — check the rules where you live, learn the basics, choose a regulated broker, practise on demo and size every trade.
Related terms
- Take profit
A take profit is an order that closes a position automatically when the price reaches a set profit target.
- Trailing stop
A trailing stop is a stop loss that moves with the price as a trade goes in your favour. It keeps a set distance from the price and does not move back.
- Slippage
Slippage is the difference between the price you expect when placing an order and the price at which it is actually filled. It can work against you (negative slippage) or in your favour (positive slippage).