In plain English
What Stop-loss order means
A stop-loss order is a protective exit. If price reaches the stop level, the order is triggered and usually becomes a market order, so the position is closed at the best available price. It can reduce downside exposure, but it does not cap loss at the stop level itself.
Why it matters
Stop-loss orders are a basic risk-control tool. They can help define an exit before entering a trade, but they do not remove market risk, and they can be affected by slippage during sharp moves, weekend gaps, or illiquid conditions.
Example
You buy EUR/USD at 1.0800 and place a stop-loss at 1.0760. If the market falls to that level, the stop triggers. If price gaps to 1.0752, the exit may occur near 1.0752, not exactly 1.0760.
Quick answers
Common questions
Can a stop-loss order be filled worse than the stop level?+
Yes. Once triggered, it may fill at the next available price, which can be worse than the stop level.
Does a stop-loss remove all risk?+
No. It can limit losses on a position, but it does not eliminate trading or counterparty risk.
Sources