A stop-loss is an order that automatically closes a position when price reaches a predefined level, limiting the loss on a trade to a planned amount. It is the instrument that turns “risk per trade” from an intention into an enforced rule, and it defines 1R — the unit all R-multiple accounting is built on.
Placement is a trade-off. Stops too tight get hit by ordinary noise before the idea can work; stops too wide force tiny position sizes or oversized losses. Most systematic approaches anchor the stop to the level that invalidates the trade idea — beyond the swept low, outside the opening range — rather than to a fixed dollar amount.
Stops are protective, not guaranteed: a stop-market order fills at the next available price, so gaps and fast markets produce slippage beyond the level, while a stop-limit can fail to fill at all. Moving a stop further away mid-trade is the classic way traders convert small planned losses into account-threatening ones.