InsiderFlow › Glossary › What is a stop loss?

What is a stop loss?

A stop loss is an automatic order that sells when the price falls below a threshold: the trader's emergency brake.

You set a threshold (e.g. -10% from your entry): if the stock touches it, an automatic sale triggers. It limits losses without you watching the market every minute, and it's central to leveraged trading.

The dark side: in volatile markets the stop can trigger on a momentary dip, selling you out at the lows right before the rebound. For long-term investors in diversified ETFs, stop losses often do more harm than good.

Concrete example

With a -10% stop loss, a stock bought at 100 is automatically sold around 90 — even if an hour later it climbs back to 105.

How you see it in InsiderFlow

On InsiderFlow these concepts come alive on real data: what big funds and insiders are buying, explained every day.

Frequently asked questions

Does a stop loss guarantee the sale price?

No: it triggers as a market order, and in price gaps it can fill well below the threshold.

Is it useful for long-term investing?

Rarely: on diversified portfolios it sells at the worst moments. It's a trader's tool.