Stop Loss: What It Is and How to Set It in MT5

What you'll learn

• What a stop loss is, how it works and the main types.
• Where a stop loss and a take profit sit on a buy and a sell.
• The common ways traders decide where to place a stop loss.
• How to set and change both levels in MetaTrader 5, and work out the money at risk.

This lesson is part of the MetaTrader 5 Basics module.

What is a stop loss?

A stop loss is a price level you attach to a trade so the platform closes the position automatically if the price moves against you and reaches that level. It limits the loss on that one trade and works while you are away from the screen. You can set it when you open the trade or add it later.

A take profit is its partner: a level that closes the trade at a target you chose. Together they set your exit in advance.

Definitions

• Stop loss (SL): a level that closes your position if the price moves against you, to limit the loss.
• Take profit (TP): a level that closes your position at a target you chose.
• Slippage: the difference between the level you set and the price you actually get.
• Gap: a jump in price with no trading in between, often when a market reopens after the weekend.

How does a stop loss work?

A stop loss works by turning into an instruction to close your trade at the next available price once the market touches your level. Usually that price is at or near your level, and in a fast or gapping market it can be past your level.

The US Securities and Exchange Commission's investor site explains that once the stop price is reached, a stop order becomes a market order, and the price you get may differ from the stop price, especially in a fast-moving market.

A stop loss is also not the same as a buy stop or sell stop, which open a new position. The forex order types lesson explains those.

What types of stop loss are there?

There are three main types: a standard stop loss that stays at a fixed level, a trailing stop that follows the price as the trade moves your way, and a guaranteed stop that some providers offer as a separate feature.

• Standard stop loss: stays where you put it until you move or remove it. This is the type this lesson covers.
• Trailing stop: in MetaTrader 5, the stop loss moves with the price as the position's profit grows and stays put when the price moves back. Unlike a normal stop loss, it runs in the platform rather than on the server, so it stops trailing when MetaTrader 5 is closed. Trailing stops have their own lesson in Module 9.
• Guaranteed stop: where a provider offers one, it promises your exact level even after a gap, under its own terms. Your account terms say whether this feature is offered.

Why use a stop loss and take profit?

Traders use a stop loss and a take profit to decide their exit before the trade opens, rather than while the price is moving. Both work while you are away from the screen. A stop loss also lets you work out the money at risk on a position before you open it, the starting point for sizing a trade.

Where do stop loss and take profit go on a buy and a sell?

On a buy, the stop loss sits below your entry and the take profit sits above it. On a sell, it is the other way round: the stop loss sits above your entry and the take profit below it. Each level sits on the side the price must move to for that outcome.

The MetaTrader 5 help on trading principles states that levels on long (buy) positions are checked against the Bid price, and on short (sell) positions against the Ask. That is because you close a buy by selling at the Bid and a sell by buying at the Ask. Buying and selling are explained in the going long and short lesson.

Because a sell's stop loss is checked against the Ask, a wider spread can trigger it even when the Bid line on the chart never reaches your level. See the spread, commission and swap lesson.

1. Entry price: a buy of 0.10 lot of EURUSD at 1.1000, worth $1 per pip.
2. Stop loss zone below entry: 20 pips away at 1.0980, a $20 loss before costs if the price reaches it.
3. Take profit zone above entry: 40 pips away at 1.1040, a $40 gain before costs if the price reaches it first.

How do traders decide where to place a stop loss?

Three common approaches set the stop loss distance from a level on the chart, from how much the price normally moves, or from the amount of money you accept losing. You can combine them: a chart level sets where the stop goes, and the money amount sets the position size.

• A chart level: the stop goes just past a price that, if broken, would mean the reason for the trade no longer holds, such as a support or resistance level. See the support and resistance lesson.
• Normal price movement: the stop sits further away than the price usually swings, so ordinary noise is less likely to close the trade. In MetaTrader 5, the Average True Range indicator shows the volatility of the market, which is one way to measure that swing.
• A money amount: you choose the loss you accept on the trade first, then size the position so the stop distance matches it. The position sizing lesson covers this.

Whichever way you choose the level, the stop must still sit outside the symbol's stops level, explained below, and it is checked against the Bid or Ask as shown in the table above.

How do you calculate stop loss and take profit?

You calculate the money value of each level by multiplying its distance from entry in pips by the pip value for your position size. So money at risk = stop loss distance in pips × pip value. A 30-pip stop at $2 per pip puts $60 at risk. Spread and any commission or swap come on top.

The lots, pips and pip value lesson explains it, and the pip value calculator works it out for any pair. Lot sizes are also covered in our guide to forex lot sizes.

Worked example

You buy 0.20 lot of EURUSD at 1.08500. For a pair quoted in US dollars, one standard lot is worth about $10 per pip, so 0.20 lot is worth about $2 per pip.

The take profit here is twice as far as the stop loss, a risk-to-reward ratio of 1:2, which you can check with the risk reward calculator. The price may reach either level first, or neither.

What if the price gaps past the stop loss?

Say the market closes on Friday with EURUSD at 1.08300, still above your stop. It reopens on Monday at 1.08000. Your stop triggers at the first available price, so the trade closes near 1.08000, not 1.08200. The loss is 50 pips × $2 = $100 before costs, not the $60 you planned.

The position size calculator works the formula backwards from a chosen loss. Module 5, Risk Management, covers the risk-reward ratio and position sizing.

How do you set stop loss and take profit in MetaTrader 5?

You can set stop loss and take profit in the order window when you open a trade, or add and change them later on an open position. There are three places to do it. The MetaTrader 5 help on executing trades describes each.

1. When you open a trade: in the order window, type a price in the Stop Loss and Take Profit fields before you click Buy or Sell. A field left unset means no level is set.
2. On an open position: in the Trade tab of the Toolbox, right-click the position and choose Modify or Delete. Enter the new levels and confirm with the Modify button.
3. On the chart: with Show trade levels turned on, left-click a stop loss or take profit line and drag it to a new price. A window opens so you can check the exact level.

If a level breaks the platform's rules, MetaTrader 5 shows Invalid stops and rejects it. Placing your first order step by step is covered in the lesson on placing your first trade in MT5.

What is the stops level?

The stops level is the minimum distance, in points, between the current price and any stop loss, take profit or pending order. The MetaTrader 5 Market Watch help describes it as a channel around the current price where these levels cannot be placed. A level inside it is refused with Invalid stops. Find it in the symbol's Specification. On a five-digit pair, 10 points equal 1 pip.

How do skilled traders manage stop loss and take profit?

Skilled traders place the stop where the trade idea is proven wrong, size the position to that distance, and leave the stop in place once the trade is open. They allow for gaps after weekends and major news, and keep stops clear of short-term price swings and brief spread widening.

• A stop loss covers one position, so add up the money at risk across all your open trades.
• Keep the stop where you placed it: moving it further away as the price nears it raises the money at risk.
• A take profit closes the whole position at your target. To follow a longer move, traders use a trailing stop instead.

Later lessons cover two ways of moving a stop on purpose: trailing stops in Module 9 and break-even stops in Module 10.

Try it on demo

On a MetaTrader 5 demo account, open a 0.01-lot buy on EURUSD with a stop loss 20 pips below and a take profit 40 pips above. Work out the money value of each with the pip value calculator. Then drag the stop loss line on the chart and check the Trade tab.

What is the difference between a stop loss and a take profit?

A stop loss closes a trade that has moved against you, to limit the loss. A take profit closes a trade that has moved your way, at a target. On a buy the stop loss sits below entry and the take profit above; on a sell it is the reverse.

How do you calculate a stop loss?

Multiply the stop distance in pips by the pip value for your position size. On 0.20 lot of EURUSD, at about $2 per pip, a 30-pip stop puts $60 at risk before costs. To work backwards from a chosen amount, divide it by the stop distance to get the pip value, then the lot size.

Should I always use a stop loss?

A stop loss is the main tool for capping the loss on a single position, and it gives you the money at risk you need for position sizing. Without one, a trade stays open until you close it or your account's margin runs out. Module 5, Risk Management, covers this in detail.

Can I change my stop loss after opening a trade?

Yes. In MetaTrader 5, use Modify or Delete on the position in the Trade tab, or drag the stop loss line on the chart. The new level must sit outside the stops level.

Why did my stop loss close at a different price?

Because a triggered stop loss takes the next available price, which can differ from your level, most often around news or after a gap. On a sell, a wider spread can also trigger it early.

• MetaQuotes, MetaTrader 5 Help: Basic Principles, accessed 19 October 2026: stop loss limits losses and take profit closes the position at a target; on activation the entire position is closed; levels on long positions are checked against the Bid and on short positions against the Ask; a buy's stop loss sits below the Bid and take profit above it, and the reverse for a sell; a trailing stop moves the stop loss with the price as profit grows, is not modified when the price moves back, and runs in the platform rather than on the server, so it does not work while the platform is off. https://www.metatrader5.com/en/terminal/help/trading/general_concept
• MetaQuotes, MetaTrader 5 Help: Average True Range, accessed 19 October 2026: the Average True Range indicator shows the volatility of the market. https://www.metatrader5.com/en/terminal/help/indicators/oscillators/atr
• MetaQuotes, MetaTrader 5 Help: Executing Trades, accessed 19 October 2026: stop loss and take profit fields in the order window, a field left at zero sets no level, Modify or Delete from the Trade tab context menu, dragging levels on the chart with Show trade levels enabled, and the Invalid stops message. https://www.metatrader5.com/en/terminal/help/trading/performing_deals
• MetaQuotes, MetaTrader 5 Help: Market Watch, accessed 19 October 2026: the stops level is a channel of prices, in points, from the current price inside which stop loss, take profit and pending orders cannot be placed, and orders inside it are rejected with Invalid stops. https://www.metatrader5.com/en/terminal/help/trading/market_watch
• US Securities and Exchange Commission, Investor.gov, Stop Order, accessed 19 October 2026: when the stop price is reached a stop order becomes a market order; it can be activated by a short-term price fluctuation; and the execution price may differ from the stop price, especially in a fast-moving market. https://www.investor.gov/introduction-investing/investing-basics/glossary/stop-order