iFOREX Education - What is Stop Loss?

For more information on Stop Loss and other trading tools go to http://bit.ly/1OUfgZn Capital is at risk Stop Loss is a trading tool that can help traders protect their investments. Stop Loss allows you to set a limit to the amount you are willing to risk, and prevents unnecessary losses. John for example, wants to invest $400 in Oil prices, hoping to profit when prices rise. To limit his losses if prices go down instead of up, John can set a Stop Loss limit to the deal at $300. If the price of Oil moves down, the Stop Loss limit will automatically close the deal when his investment drops below $300, saving him further losses if prices continue to drop. Setting a Stop Loss can free John from the need to follow his trade constantly, and can help him manage a few trades simultaneously with confidence.

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