A pre-set exit price for a losing trade, capping your loss before it grows.
A stop-loss is a price you set in advance to exit a stock if it moves against you, preventing a small loss from becoming a large one. For example, you buy at 10 and place a stop at 9: if price hits 9 you sell and cap your loss at 10%. The key idea in risk management is not predicting direction correctly every time, but controlling the size of your loss when you are wrong. Traders usually place the stop below an important support level or at a fixed percentage of capital. Its drawback is that noise can "hit" the stop before the stock recovers, so placement is an art. FoudaLens suggests stop-loss zones in each stock's trading plan.