Stop-Loss
A pre-set price level at which a losing trade is closed to cap the damage before it grows larger.
A stop-loss is an exit order placed below (long) or above (short) your entry that automatically closes the position if price moves against you. It converts unlimited risk into a defined, finite loss.
Without a stop, a small loser can become a wipe-out. The best stops are placed at technically meaningful levels — below support, above resistance, or outside the average true range — not at arbitrary round numbers.
Hard stops (on the exchange) beat mental stops for most traders because emotion delays execution at the worst possible moment.
On the desk
Long entry at $150. Stop placed at $145 (below swing low). If price falls to $145 the trade closes, locking in a $5-per-share loss instead of riding the move down indefinitely.