Why do I need a stop-loss on every trade?

How a stop-loss works

A stop-loss is an instruction to close your trade automatically if the price reaches a certain level you specify. If you buy EUR/USD at 1.0850 and place a stop-loss at 1.0840, your position closes automatically if the price drops to 1.0840, limiting your loss to 10 pips.

Real-world protection

Markets can move fast—especially during economic data releases or weekend gaps. Without a stop-loss, a sudden 50-pip move against you could wipe out weeks of profits in seconds. You cannot always exit manually in time. A stop-loss executes regardless of how far the market moves.

Setting reasonable stops

Your stop-loss distance should fit your strategy and account size. Placing it too close triggers false losses; too far defeats the purpose. A common approach: set your stop at a distance you can afford to lose, then size your position accordingly. Never skip this step hoping a bad trade will reverse—the market doesn't care about your hope.