A stop-loss closes a losing position automatically when the price reaches your defined level. A take-profit closes a winning position automatically at your target. Set both before you enter the trade. Stop-loss size should be based on the market structure (where the trade idea is invalidated), not on how much you can stand to lose.
Why stop-losses exist
Trading without a stop-loss is the most reliable way to blow up an account. "I'll just watch it" works until the moment it doesn't — a news event, a phone call, a bad night's sleep. The stop-loss is the rule you set in advance so that bad decisions in the moment can't override it.
Steps to set a stop-loss
1. Before clicking Buy or Sell, open the order ticket and find the Stop-loss field.
2. Decide where the trade idea is invalidated — the price at which you'd say, "I was wrong about this trade."
3. Enter that price as your stop-loss.
4. Optionally enter a take-profit at the price you're targeting.
5. Confirm the trade. Both orders are now in the system and will execute automatically.
Sizing the stop-loss
Place the stop where the market structure says you're wrong. For a long position, that's typically below a recent swing low or below a key support level.
Calculate position size from the stop. If your stop is 30 pips away and you're willing to risk $30 on this trade, your position size is 1 micro-lot ($1 per pip). Position size should adjust to the stop, not the other way around.
Don't move the stop further away once the trade is open. If you find yourself wanting to, the trade thesis was probably wrong and you should close instead.
Take-profit considerations
Set take-profits at logical price levels (resistance for longs, support for shorts) — not at arbitrary round numbers.
Aim for at least 2:1 reward-to-risk. If your stop is 30 pips, your take-profit should be at least 60 pips. With 2:1, you can be wrong half the time and still be profitable overall.
You can move a take-profit closer once the trade is meaningfully in profit (a trailing stop). This locks in some gain in exchange for capping the maximum win.
Important notes
During news events and at market open, stops can fill at worse prices than your trigger (slippage).
A stop-loss is not insurance. It limits losses on individual trades. Your overall risk also depends on how many positions you have open at once and how correlated they are.