What is Stop Loss on US Stocks?

Stop Loss is another term for sell stop order and is included in Exit Strategy. This order helps you to execute sell limit order after the market price reaches the stop price, thus helping you to prevent bigger losses. You can add stop loss order as Exit Strategy when creating a buy order, and the stop loss order will be automatically triggered after the buy order is completed/successful.

Example:

You buy shares of a technology company at $150.00 per share. To limit your potential loss if the price drops, you add a Stop Loss order as part of your Exit Strategy.

You set the Stop Price at $140.00, which means you are willing to sell the stock automatically if the market price drops and hits $140.00, so that the loss does not get bigger.