To limit one's losses, a stop loss order closes a position at a certain price point/percentage.
Stops are used to limit losses when a trade idea fails.
A stop loss is an important tool in risk management. Any (sensible) book, webinar, mentorship, guru, etc. will stress the importance of using a stop when trading.
Poor stop placement and management can cost you a lot of money, paradoxically.
A candle wick triggers your stop, knocks you out of a trade, and the price proceeds to hit your exact target without you.

Stop loss orders are important for controlling trading risk, but traders often make mistakes when using them. One major mistake is setting the stop loss too tight, which can cause trades to close during small price movements. Another common issue is widening the stop loss after entering a trade instead of accepting a planned loss. Some traders avoid using stop losses completely, risking large damage to their accounts. Failing to adjust stop loss levels according to market volatility is also a problem, especially in fast-moving markets. In addition, many traders use identical stop loss distances for every trade without analysing the setup properly. These mistakes can negatively affect trading performance and emotional discipline. A well-placed stop loss should be based on technical levels, market conditions, and proper risk management. Using stop losses wisely helps traders protect capital, reduce emotional decisions, and maintain long-term consistency in trading.