A stop order is an order used by money changers with common experience to limit their risk. In short, by creating a stop order, the trader actually made progress in defining the amount of seeds and money you're willing to risk a position. For example, if an operator goes far in the EUR / USD at 1. 5500 pair of regular trading 1 lot (ie $ 100000) and establishes an order to stop 1. 5450 means that the trader risks or 50 pips $ 500. If the aim of halting the loss is affected 1. 5450 to the trader loses the above amount, but not more than that. Many novice forex trading without a warrant stop. Other established stop but when it is close to being an attack tend to spend so (increasing their potential risk) or simply cancel it. If I have to mention one thing I learned as a trader, here is: Never go into a shop without halting the loss of order. If you do enter a trade without a stop loss order - which will fail in the long run. There are 3 major reasons why you should always use a stop loss for currency trading if: 1. Discipline: Discipline is a key element for success in the field of foreign exchange. Assuming that you use a proven business strategy (otherwise you're not in the right business . . . ), this strategy should include rules limiting loss. Once you do not use stop that break the rules of its own strategy, which is typical of losing 95 percent of the herd. As discipline is 90% of the currency game, you can not win the game if we do not possess. Successful traders, the top 5 percent, stop using always loss. 2. Money management: Another big key to success. If you have a good strategy for managing money (and should), means that you are at risk of not more than 1 to 3 percent of its commercial capital in each trade. As mentioned above, the risk is determined by the position of halting the loss of their order. If you do not use stop loss, your risk is virtually unlimited. Without a stop loss, nothing stops their trade go against you until you receive a call margin. For those of you who do not know, in the world forex margin call means - "Game Over" . 3. Risk Management: Perhaps the key element of foreign exchange trading. To be a trader profitable in the long run, you must have a reasonable risk management plan. This means that their risk / reward ratio in each trade must be at least 1:1 (1:3 I prefer). For example, if the history of their business strategy shows that 60% of trades are winners, but you risk 20 pips for every 10 pips profit (ie, risk / reward ratio of 2:1), after a hundred shops is that it is losing money [10pipsX60-20pipsX40 = (-200pips)]. If the trade without limitation loss, your risk is unlimited. Hence, their risk / reward ratio can not be in his favor. Only by addressing the illustration, let's say you have a magnificent trading system that produces winning 90 percent of the time. Now, imagine you trade without a stop order. So out of 10 shops suppose you have 9 winners in a row, 50 pips profit each (450 pips profit to date). But then you have this 1 loser out of 10 trade and the market goes against you. Since negotiated without limitation loss, your risk is unlimited and can easily lose more than 450 pips it acquired in recent trades 9. A bad trade 9 wipes out successful operations. In short: you are losing money. New traders tend to underestimate the orders stop. I hope you got the point now. However, many other factors and key elements that one must master to succeed as a forex trader. Remember - forex is a relatively new business opportunity that was not available to the public a few years ago but at the same time, the currency can be risky and frustrating. If you are new to currency trading, it is highly recommended that you get a good "forex education" before you start trading with real money.