#StopLossStrategies

A stop loss strategy is a risk management tool used by traders and investors to limit potential losses on a trade. By setting a predetermined price level at which a security will be sold, the strategy helps protect capital in volatile markets. For example, if a trader buys a stock at $50 and sets a stop loss at $45, the position will automatically close if the price drops to $45, minimizing further loss. This approach removes emotion from trading decisions and ensures discipline. While it cannot prevent losses entirely, a stop loss strategy is essential for maintaining long-term financial stability.