What is a stop-loss? Common ideas

A stop-loss is a rule decided in advance: exit when the loss reaches a certain level. How much is a personal matter of risk tolerance; there is no standard answer.

Updated：2026-11-15

What it is

A stop-loss is deciding before you buy: if the price moves against you to a certain point, you sell and stop holding. The aim is to keep a single loss within what you can accept.

Common ideas (explanation only, not advice)

• Fixed percentage: exit when the loss reaches a set percentage of cost.
• Technical level: exit when price breaks a level such as a previous low or a moving average.
• Volatility: use the average true range (ATR, see “ATR: how it is calculated and read”) to gauge a stock’s normal swing as a reference for the distance.
• Amount cap: decide the most you can lose on one trade, then work back to position size.

Limits to keep in mind

• No guaranteed price: with gaps, limit-locked moves or thin liquidity, the actual fill can be far from your stop, or may not fill at all.
• Too tight gets you shaken out; too wide makes losses larger; no number suits everyone.
• Decide in advance and follow it; deciding on the spot is easily swayed by emotion.
• Long-term holders and short-term traders use different approaches.

On this site

You can set a price alert on your watchlist to be notified when the price touches a level; an alert is only a reminder and places no order.

This article only explains terms and ideas. Tenmizu does not provide investment recommendations or stop-loss levels and this is not investment advice; judge for yourself according to your own situation.