An order set on an open position to automatically close the trade if the market price reaches a specified level adverse to the position, capping the loss. It’s a key risk management tool: for example, if you’re long EUR/CHF at 0.9800, you might set a stop-loss at 0.9700 to limit potential loss. (Stop-loss orders can also be used to lock in profits on a winning trade by trailing them upward, see Trailing Stop.)

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