> ## Content Index
> Fetch the complete content index at: https://www.flltlt.com/llms.txt
> Use this file to discover other available public pages before exploring further.

# Stop Loss Orders Explained: Types and Where to Place Them
- URL: https://www.flltlt.com/blog/stop-loss-orders/
- Published: 2026-10-27T15:20:09.000Z
- Updated: 2026-10-27T17:39:53.000Z
- Description: What a stop loss is, stop-market vs stop-limit vs trailing stops, where to place your stop and the mistakes that turn small losses into big ones.
- Author: Fulltilt
- Tags: Trading Glossary, Risk Management

**The short answer:** A stop loss is an order that closes your position if price moves against you to a level you choose in advance. It caps how much one trade can lose. The most common type is a stop-market order, which turns into a market order when your price is hit. Good stops go where your trade idea is proven wrong, like just beyond a swing low, and your position size is then set to fit that distance.

## Key takeaways

- A stop loss limits the loss on a single trade.
- Stop-market orders almost always fill, but not always at your exact price.
- Stop-limit orders control the price but may not fill at all.
- Place the stop where the idea is wrong, then size the position to fit.
- Moving a stop further away mid-trade is how small losses become big ones.

## What is a stop loss order?

**An instruction to exit a trade automatically at a set price.** If you buy at 105 with a stop at 100, your platform will sell if price trades down to 100\. You decide the maximum loss before you enter, not while you watch the trade go red.

## Where should you put a stop loss?

**Where the reason for the trade stops being true.**

![Where the stop goes on a 5-minute chart: a long entry after a pullback, with the stop placed a little below the swing low where the trade idea is proven wrong.](https://storage.ghost.io/c/a0/84/a0847890-aa24-4d5e-b6dd-8a7b42022bb3/content/images/2026/10/stop-loss-chart.png)

In the chart, the trade idea is "the pullback is over and the uptrend continues." If price breaks below the pullback's swing low, that idea is wrong. So the stop goes a little below that low, with a few ticks of room for noise. Other common spots: beyond a [support or resistance level](https://www.flltlt.com/blog/support-and-resistance/), beyond [VWAP](https://www.flltlt.com/blog/vwap-trading-strategy/) or back inside an [opening range](https://www.flltlt.com/blog/opening-range-breakout/).

Then size the trade to fit: contracts = dollar risk ÷ (stop distance × point value). See [position sizing for futures](https://www.flltlt.com/blog/position-sizing-futures/).

## What types of stop orders are there?

| Type          | How it works                                          | Trade-off                                           |
| ------------- | ----------------------------------------------------- | --------------------------------------------------- |
| Stop-market   | Becomes a market order when your price trades         | Fills almost always, but can slip in fast markets   |
| Stop-limit    | Becomes a limit order at your price or better         | Controls price, but may not fill if price gaps past |
| Trailing stop | Moves with price by a set distance as the trade works | Locks in gains, but can exit on normal pullbacks    |
| Mental stop   | No order; you plan to exit by hand                    | Easy to ignore when it matters. Not recommended.    |

Most day traders use stop-market orders for protection, because a stop that doesn't fill isn't protection.

## What are the most common stop loss mistakes?

- **Stops based on dollars, not the chart.** "I'll risk $100" is a size decision. Where the stop goes is a chart decision.
- **Stops too tight.** Right on the level, so normal noise takes you out.
- **Moving the stop further away.** The plan was wrong, so the plan gets changed. This is one of the classic [tilt](https://www.flltlt.com/blog/trading-on-tilt/) signs.
- **No stop at all.** In a prop firm account with a [trailing drawdown](https://www.flltlt.com/blog/trailing-drawdown-explained/), one unprotected trade can end the account.

> **From the desk** Indy trades MNQ and records results in points on [Day Trader Income](https://www.daytraderincome.com/). The stop is decided in points from the chart first. Only then does the contract count get worked out. It never works the other way around.

## The bottom line

A stop loss is the decision you make while calm, so you don't have to make it while losing. Put it where the idea is wrong, use an order that will actually fill, size the trade to fit, and leave it alone.

## FAQ

### What is a stop loss order?

A stop loss is an order that automatically exits a trade if price moves against you to a level you set in advance, limiting the loss on that trade.

### What is the difference between a stop-market and stop-limit order?

A stop-market order becomes a market order when triggered and almost always fills, possibly with slippage. A stop-limit order becomes a limit order and controls price, but may not fill.

### Where should I place my stop loss?

Where your trade idea is proven wrong, such as just beyond a swing low, support or resistance level, with a few ticks of room for noise.

### Should I move my stop loss?

Moving it further away to avoid a loss is a common mistake. Moving it to lock in profit, like a trailing stop, is a different decision that should be part of your plan.