A stop loss is a pre-set price at which you automatically sell a stock to limit your loss on a trade. For example, if you buy a stock at $100 and set a stop loss at $90, your position automatically sells if the price falls to $90, capping your loss at 10%. Stop losses are a fundamental risk management tool that prevent small losses from becoming catastrophic ones.
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Market Navigator Glossary — plain-English definitions of 93+ investing and crypto terms. All content is for educational purposes only and does not constitute financial advice.