A stop lossLossThe realized loss on a closed position, or the sum of every losing position across a period.Click the word to learn more is a decision you make before the pain. You set the price at which you will cut the positionPositionA single entry held on the broker account, with a direction, a size, and a current floating result.Click the word to learn more, 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 orderMarket OrderAn order that fills immediately at the best available price the broker offers right now.Click the word to learn more.
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 executionExecutionHow the broker turns an order into a real fill: speed, routing, and the price you actually get.Click the word to learn more 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 drawdownDrawdownThe drop in account equity from a peak to the trough that follows, expressed as a percent of the peak.Click the word to learn more cap. If equityEquityThe live value of your broker account, including the floating profit or loss of open positions.Click the word to learn more 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.