Smart Money Concept.

Beginners do not always understand what a stop-loss is, as there are sometimes inaccurate descriptions of its work principle. Many traders think a stop loss is unnecessary, considering it a measure for cowards. There are often recommendations like “Set a stop loss to limit potential losses.” But most inexperienced traders believe they could avoid significant losses.

A stop loss is not a kind of insurance, it is an OBLIGATORY element of any trading strategy.

The need for a stop order in trading is dictated by market unpredictability. For example, the price could go in the wrong market direction. And in this case, a stop loss is placed.

Furthermore, one never knows HOW the price can move towards the target value. For example, the price can go more or less evenly 20 pips up from the entry price.