A method of limiting risk, a stop loss is an order placed to buy or sell a stock once that stock reaches a specific price. This mitigates risk as it allows the trader to quickly exit a trade if the desired stock drops too low. When a stock reaches the set price, the stop order is executed automatically. That way, the trader doesn’t have to be constantly monitoring the market and can’t be caught off guard by rapid price movements.
We don't know everything about the markets. We're just devoted to learners. Taken from those smarter than ourselves, here's how we define Stop Loss.