What is Stop-Loss Order?

A stop-loss order is an order type designed to help prevent excessive losses for traders. It works by setting a specific "stop" and "loss" price, whereby the "loss" price is the first price that triggers the asset to prepare to sell if the "stop" price is reached. Stop losses are designed to sell a security if its price falls below a certain amount, to help guard against unexpected losses. For instance, a user could specify the sale of a particular company's stock or cryptocurrency asset if it falls in value from its original purchase price as described above.