What is a Stop Loss?
How stop losses protect you from big losses and why every trade needs one.
The simple version
A stop loss is a pre-decided price at which you exit a trade if it goes against you. It is the maximum loss you are willing to accept on that trade — set before you enter.
Why every trade needs one
Without a stop loss, a losing trade has no limit. A stock can fall 10%, 30%, 80%. With a stop loss, your worst case is defined before you press the buy button.
Professional traders do not use stop losses because they are cautious. They use them because it allows them to take more trades with confidence — knowing each trade has a bounded downside.
Example
You buy a stock at $100. You set your stop loss at $95. If the stock falls to $95, you exit. Your loss is 5% — no worse, no matter what happens after.
How to read the stop on a TradeMind signal
Every signal shows three prices: Entry, Stop, and Target.
- Entry — the price the AI is signalling at
- Stop — the price at which the trade is wrong and you exit
- Target — the price where the AI expects the move to reach
The stop is calculated to be 0.5–5% from entry, tight enough to limit loss but wide enough to avoid random noise shaking you out.
See it in action
Every TradeMind AI signal shows confidence score, entry, stop, target, and R-multiple — all explained with tooltip hints when you hover the term.