Stop-Loss to Control Risk

It is advisable to place a protective stop-loss for every open position. Stop-loss is a point when the trader leaves the market in order to avoid an unfavourable situation. When opening a position it is recommended to use stop-loss to insure against extra losses.
While in active trade it is good to protect your fund against potential total loss. That is the central purpose of money and risk management. Too often, the beginning trader will be overly concerned about incurring losing trades. Trader therefore lets losses mount, with the hope that the market will turn around and the loss will turn into a gain.
Almost all successful trading strategies include a disciplined procedure for cutting losses. When a trader is down on a position, many emotions often come into play, making it difficult to cut losses at the right level. The best practice is to decide where losses will be cut before a trade is even initiated. This will assure the trader of the maximum amount he or she can expect to lose on the trade.