Is risk the same as stop loss
The distance between entry and stop-loss, multiplied by the size of your position, gives you the risk. In this context risk is the percentage of your account capital that would be lost if your stop-loss was triggered.
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Well; if you are trading without technical & fundamental knowledge then it’s risky! It’s true, there is no guarantee in Forex but, knowledgeable traders can make handsome money end of the day.
Stop-loss is an attempt to manage only one of the existing risks in trading
An “order” refers to a setting for opening a new position at a specified price on the platform. You can preset the order opening level, but you cannot set to close the position outside the trading time for the financial instrument.
What is a stop-loss order?
A stop-loss order allows you to set an automatic closing price in advance to avoid price fluctuations which may cause excessive losses to your position and to limit your losses. When the value of your position reaches or skips (the price may fluctuate higher or lower when fluctuations are excessive) this price, the stop-loss order will be triggered and your position will be automatically closed.
This function does not guarantee that a position is actually closed at the price, due to market fluctuations that sometimes lead to “slippage”. When the market price reaches or skips your pre-set stop-loss level, your position will be closed at the next best price.
Examples:
The US30 CFD’s bid/ask price is $22,916.66/$22,919.86.
You buy 10 US30 CFDs and place the stop-loss level at an sell price of $22,896.50.
If the US30’s price suddenly drops from $22,916.66 to $22,886.40, your position will be closed at $22,886.40 instead of your original stop-loss price of $22,896.50.
It is because the placement of a stop-loss order does not guarantee that your position will be closed at that price. When the stock price suddenly falls below $22,896.50, the stop-loss order is triggered and the position is automatically closed at the next best closing price, which is $22,886.40 in this example
Although, stop-loss is the most efficient tool to manage risk since it helps you to ensure that in no way the loss would exceed the maximum amount defined in advance. Of course, there could be unexpected situations like squeezes when the actual execution price would differ substantially, but it happens not so often.
stop loss a great technique which protect your equity from huge losses , completely agree with Mr.piece that it an approach which manage only one of the existing risks in trading.