Stop-loss

A stop-loss is an automatic instruction to sell a stock if its price drops to a specific level you set in advance. Think of it as a safety net: you decide beforehand how much loss you're willing to take, and the order executes automatically if that price is hit. You'll encounter this when setting up trades on most brokers, and it matters because it removes emotion from selling decisions—you won't panic-hold a falling stock hoping it bounces back. For example, if you buy shares of TechCorp at $50 and set a stop-loss at $45, your shares automatically sell if the price hits $45, capping your loss at $5 per share. It's not foolproof (prices can gap past your stop), but it's a practical way to protect yourself.