What is a stop loss?

The definition of a "stop loss"

Posted in FAQ, Submitted by Trading Critic on Sat, 2006-07-08 00:48.

A stop loss is a defined level at which a trader would exit their short or long position. A stop loss can take a mental or a physical form. A mental stop loss is when a trader takes note of the price at which the stop loss resides, and only executes the exit order if they so wish. A physical stop loss is when an actual stop loss order is placed with the broker to exit the relevant trade at the predetermined level.