Before entering into the Dalal Street, The arena of stock market industry, people only familiar with the Buy and Sell of Stocks. But the Moment they open their first D-MAT Account, and start trading and investing online, they get introduce with a new and unfamiliar words “STOP LOSS”. In Simple words Stop loss is an automated Order which is being placed by your trading platform buying or selling the instrument to decrease or curtail your risks. Basically stop loss is designed to limit the trader’s risks.  A trader use the stop loss order where there is too much risk or if the script is highly volatile, where you cant keep a continuous monitors.  Your trading software automatically buys or sells and instrument on behalf of you if there is free falls of markets or collapsing the share prices.  Its serves a protections of  excessive losses or in case of  TRAILING STOP LOSS  it will book profit on trailing the instrument on behalf you.

   Stop Loss is a very useful and beneficial tool for a trader which helps the trader in a various way keeps help then to trade on multiple scripts simultaneously. It helps a trader to monitor all parts of the market without any extra financial burden where before placing the buy order the trader know all stocks risk and can concentrate on finding new scripts for trade on thus It help them better control of his account
It helps a trader without any emotional attachment with the stocks. Generally the traders may keep waiting for few more min and more and the instrument keep falling or rising (For short selling) and takes the major part of the capital away.

   Curtail a Traders  risk in high volatile scripts if a trader sets a Stop loss 0.05%-1%  below of his buying prices means he or she will only loss that much of his capital where he place his SL.


   Now the big questions arise where to keep the stop loss. All the traders are pretty much confused about proper place of a stop loss. There are no such die hard rule for stop losses its totally depends upon the traders trading stile and risk taking ability.
As a general guidelines when you buy a Stocks place your STOP LOSS recent price bar low or swing low. Or if you sell you can put your Stop Loss recent price bar high or swing high.

    if you are a trader you can opt for max 1% and if you are an Investor you can choose upto 20% -30% depending upon your investing time frame. Though there is strategic technique are different for value investors and growth investors. A smart trader who can determines the supports or resistance very appropriately, he or she use the Stop loss below the supports for buying an instrument and in case of short sell above the resistances. More over if you execute your trades with proper strategy and sit tight with the SL it will never clouding your judgment with your emotions and helps you to avoid procrastinations.
Finally you should realize it that its not a guarantee  that you will always take a profit making trade if you place Stop loss (sometimes it might hit target after triggering you SL) But  ensure you, that you will never looses beyond of your  loss making capacity and kicked out of the market. It will help you to survive in the markets by saving from excessive losses.