{"term":{"slug":"stop-loss","term":"Stop-Loss","definition":"A pre-set order to close a position at a specified price to limit losses. In prop trading, stop-losses are not optional -- trading without them means a single adverse move could breach drawdown limits and terminate the account.","extendedExplanation":"Stop-losses in prop firm trading serve a dual purpose: protecting individual trade risk and protecting account-level drawdown. Without a stop-loss, a trade can run against you indefinitely, and in fast markets, the loss can exceed your daily or overall drawdown limit before you can react.\n\nThere are several stop-loss types: fixed (set number of pips/ticks from entry), ATR-based (set based on market volatility), structure-based (placed below/above key support/resistance levels), and trailing (follows price in your favor). Structure-based stops are most popular among prop firm traders because they align with logical market levels.\n\nThe width of your stop-loss directly determines your position size (through the risk-per-trade calculation). A wider stop requires smaller position size to maintain the same dollar risk. Prop firm traders often debate tight vs wide stops -- tight stops get stopped out more frequently but allow larger position sizes, while wide stops have higher win rates but smaller position sizes.","exampleWithNumbers":"FTMO $100K, risking 1% ($1,000). Trading EUR/USD: (A) 20-pip stop = 5 standard lots ($50/pip). (B) 50-pip stop = 2 standard lots ($20/pip). Both risk $1,000. Option A: more contracts, tighter stop, stopped out more often. Option B: fewer contracts, wider stop, survives more noise. With 1:2 R:R, Option A targets 40 pips ($2,000), Option B targets 100 pips ($2,000). Same reward, different trade characteristics.","category":"risk","relatedTerms":["take-profit","risk-per-trade","position-sizing","daily-loss-limit","risk-reward-ratio"]},"_links":{"self":"https://runvigil.app/api/glossary/stop-loss","page":"https://runvigil.app/learn/stop-loss","allTerms":"https://runvigil.app/api/glossary","learn":"https://runvigil.app/learn"}}