Stop Loss: Your Automatic Brake Pedal

Risk warning: No stop loss means one trade can wipe you. This is education, not financial advice.

A stop loss closes your trade automatically when price goes too far against you. It is your brake pedal.

What it does

You buy EUR/USD at 1.0800. You set stop loss at 1.0780 (20 pips below). If price falls to 1.0780, the broker closes the trade. Loss is limited to about 20 pips.

Without a stop loss, you watch the loss grow. Many beginners freeze and lose all naira — a ₦15,000 / ~$10 account can vanish in one trade.

Where to place it

• Below support for buys, above resistance for sells. See Support and Resistance: The Floors and Ceilings of Price.
• Give it breathing room — not too tight (noise hits it), not too wide (risk too big).
• Match it to the 1% rule. See The 1% Rule.

Common mistakes

• No stop loss ("I will watch it") — you will not.
• Moving the stop further when losing — this turns a small loss into a big one.
• Placing it at a round number where many stops sit.

Practise on demo first. See How to Use a Demo Account Before Risking Real Naira.

Rate used: ~₦1,500 / $1. Small amounts like ₦150 use same rate.

Bottom line: Set your stop loss below support and never move it further, or you risk one trade wiping your ₦15,000 / ~$10. Links To Guides: Pillar 3 (Beginner Setup).