Trading Basics

Stop loss explained

Stop loss – SL

Quick definition: A stop loss is an order that automatically closes your position when the price moves against you to a level you set in advance, limiting how much you can lose.

Setting a stop loss before entering a trade lets you know exactly how much each trade can cost you, without letting emotions decide.

A common rule: risk only 1–2% of your total capital per trade. The distance to your stop loss then determines the appropriate position size.

With futures, your stop loss must always sit before the liquidation price.

💡 Example

Capital of 1,000 USDT, willing to lose 1% = 10 USDT. Long BTC at 80,000 with a stop loss at 78,400 (−2%): position size should be 10 / 2% = 500 USDT.

📊 Calculate position size from your stop loss →

Related terms

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Educational content for reference only, not financial advice. Leveraged trading carries the risk of losing your entire capital.