A stop loss is a decision you make before the pain. You set the price at which you will cut the position, and you set it before you have any emotional reason not to. FINRA Rule 5350 spells out the mechanic: the moment the market prints at the stop price, the order flips to a market order.
On a buy, the stop sits below the entry. On a sell, above. When price touches it, the broker fires a market order and gets you out at the next available price, not necessarily the exact level you set. Price can gap or sprint, and the fill can land past the trigger. The SEC's own investor bulletin flags this plainly: in volatile markets, the execution price can differ significantly from the stop price.
In algorithmic trading, whether to use a stop loss is not up for debate. Every order ships with one. The level is calculated from the entry context, the room the position needs to breathe, and the risk the strategy accepts if it is wrong.
On top of every individual stop, Javlot enforces an account-wide drawdown cap. If equity falls past the threshold you set, every open position closes at once. Two layers of safety: one at the position level, one at the account level.