A stop-loss is an order that automatically sells your position once the price falls to a level you choose, capping your loss. It sits inactive until the trigger price is hit, then becomes a market order to exit. Traders use it to protect against a big drop without having to watch the screen all day.
You buy TSLA at $250 and set a stop-loss at $230. If TSLA drops to $230, your stop triggers and sells automatically, limiting your loss to about $20 per share instead of riding it down further. If TSLA rises to $280, the stop never fires and you keep your gains. Note: in fast markets the actual fill can be slightly below the trigger.
A stop-loss is how traders set their exit before emotion takes over. In the moment, watching a position fall, it is genuinely hard to sell and admit a loss, and that hesitation is where small losses turn into big ones. Setting the exit in advance takes the decision out of the heat of the moment. It isn't perfect, since fast markets can fill below the trigger, but it enforces a plan. A paper-trading simulator is a safe place to see how stops behave across calm and choppy days. JagSim gives no buy or sell recommendations, price targets, or investment advice.
Setting the stop too tight. Placing the trigger right under the current price often means normal day-to-day wobble knocks you out before the idea has room to work. The position gets stopped on noise rather than a real move.
Placing stops at obvious round numbers. Round prices like even dollar levels tend to attract crowds of stops in the same spot. Prices sometimes poke through those clusters briefly, triggering a wave of exits before reversing.
Expecting the fill at the exact trigger price. A stop becomes a market order once it triggers, so in a fast drop the actual sale can land well below the level you set. The trigger is where it activates, not a guaranteed price.
A plain stop-loss becomes a market order and fills at whatever the next available price is. A stop-limit adds a price floor, which protects against a bad fill but risks not executing at all if the price gaps past your limit.
No. It triggers at your level but fills at the next available price, so in fast or gapping markets the actual loss can be larger than the trigger suggests.
On a paper-trading simulator you can set stops with virtual money and watch when they trigger across different market conditions, which builds a feel for placement without real risk.
Last updated: July 2026
Educational only. Not investment advice. JagSim is a simulator, not a broker.