A stop loss order is a risk management tool used by traders and investors to limit potential losses on a trade. It is an instruction to a broker or trading platform to automatically sell or buy a security at a predetermined price level, called the stop price, in order to limit the investor's losses.

To set a stop loss order, a trader or investor must first determine the stop price based on their risk tolerance and market analysis. The stop price should be set at a level where the investor is willing to exit the trade if the price moves against them.

Next, the trader or investor must choose the type of stop loss order they want to place. There are several types of stop loss orders, including market, limit, and trailing stop orders, each with its own advantages and disadvantages.

Once the stop price and order type are determined, the trader or investor can then place the order with their broker or trading platform. It is important to remember that stop loss orders are not a guarantee against losses, as market conditions can change rapidly, and the execution of the order is subject to market liquidity and price movements.