#StopLossStrategies

A stop loss strategy is a risk management tool used by traders and investors to limit potential losses on a position. By setting a predetermined price at which a trade will automatically close, the trader can protect their capital if the market moves against them. For example, if a stock is bought at $100, a stop loss might be set at $95—meaning the position will be sold if the price drops to that level, preventing further loss. Stop losses can be set as a fixed dollar amount, a percentage of the position, or based on technical indicators like support levels. Trailing stop losses are also popular—they adjust as the asset’s price moves in your favor, locking in profits while still providing downside protection. Overall, a stop loss strategy helps traders stick to their trading plan, avoid emotional decision-making, and manage risk more effectively.