Educational content. This article explains what a stop-loss order is, how its types fill and how stop distance determines position size. It does not constitute investment advice or a recommendation. CFD trading carries significant risk of loss and may not be suitable for all investors.
A stop-loss order is an instruction to close an open position automatically when the price reaches a level the trader has chosen, so that the loss on that position is capped near that level. It is not a guarantee: once the level is touched, the order becomes a market order and fills at the next available price, which in a gap can be worse than the level.
This article covers the order types around the stop-loss, the exact price that triggers it, a table of what a stop costs in lots across gold, forex, indices and crypto on the live Vanto feed, and what happens when price gaps through it.
What Does a Stop-Loss Order Do?
A stop-loss order closes a position at the market once the price crosses a set level against the position, which turns an open-ended loss into a loss that is intended to stop near a known amount.
On a long position the stop-loss sits below the entry price; on a short position it sits above. The distance from entry to stop, multiplied by the position size and the contract size, is the amount the trade is planned to lose. What is contract size in trading explains the multiplier and what is a pip the unit used on forex pairs.
In MetaTrader 5 the stop-loss is a field on the order or on the open position. Once set, it is stored on the trade server, not in the terminal, so it keeps working when the terminal is closed. Only the trailing movement of a stop depends on the terminal, as covered in what is a trailing stop.
What Are the Types of Stop-Loss Order?
There are four types a CFD trader meets: the fixed stop-loss, the trailing stop, the stop-limit and the guaranteed stop, and only the first two are stop-losses in the MT5 sense.
| Type | How it works | Fill price | Where it applies |
|---|---|---|---|
| Fixed stop-loss | Stays at the level set until changed | Market order once triggered; next available price | Attached to any MT5 position |
| Trailing stop | Moves in the position's favour by a set distance, never back | Same as a fixed stop once triggered | Set from the MT5 terminal |
| Stop-limit | Stop price triggers a limit order at a second price | Limit price or better, or no fill | MT5 entry order (buy stop limit, sell stop limit) |
| Guaranteed stop | Broker commits to exit at the exact level | The set level, usually for a fee | Offered by some brokers; not a standard MT5 stop |
The stop-limit deserves care. MT5 offers it as an entry order, described in buy limit vs buy stop, while the stop-loss attached to a position closes at market. The two-price design of a stop-limit controls the fill price but allows a no-fill, and on an exit a no-fill means the position stays open while the price keeps moving. That is the reason a protective stop is a market order: it prioritises getting out over the price.
A standard MT5 stop-loss is not guaranteed. The order logic that makes a stop-loss behave like a stop order and a take-profit like a limit order is set out in the same pending-order article.
Which Price Triggers a Stop-Loss, the Bid or the Ask?
A long position's stop-loss triggers on the Bid price and a short position's stop-loss triggers on the Ask price, because closing a long means selling and closing a short means buying.
MT5 charts draw the Bid line by default. A long stop is therefore visible on the chart: it fires when the line touches the level. A short stop is different, because it fires when the Ask touches the level, and the Ask is the Bid plus the spread.
A worked example with illustrative levels: a trader sells EURUSD and places the stop-loss at 1.12500. The chart's Bid line reaches 1.12494, below the stop. If the spread at that moment is 1.2 pips, the Ask is 1.12506, the level is crossed and the position closes. The chart shows a price that never touched 1.12500, yet the stop was triggered. A wider spread, as at the daily rollover or around news, moves the trigger further from the chart line. How the spread behaves is covered in what is the spread in trading.
How Does Stop Distance Set the Position Size?
The position size that risks a chosen amount is the amount at risk divided by the stop distance in price terms and by the contract size, so a wider stop forces a smaller position and the same percentage stop gives very different lot sizes by instrument.
Lots = amount at risk / (stop distance x contract size)
The table fixes the stop at 0.5% from entry and the risk at USD 100, which is 1% of an illustrative USD 10,000 account. The 0.5% is a yardstick to compare instruments, not a suggested stop. Prices are the bid-ask midpoints in the Vanto feed snapshot, 10 October 2026. For JPY and EUR instruments the notional is converted to USD with the same snapshot's USDJPY and EURUSD midpoints.
| Symbol | Class | Contract size | Notional per lot (USD) | Stop distance (0.5%) | Lots for USD 100 risk | Minimum volume |
|---|---|---|---|---|---|---|
| EURUSD | Forex | 100,000 | 112,022 | 0.00560 (56 pips) | 0.17 | 0.01 |
| USDJPY | Forex | 100,000 | 100,000 | 0.791 (79.1 pips) | 0.20 | 0.01 |
| XAUUSD | Metals | 100 | 419,451 | 20.97 | 0.04 | 0.01 |
| UKOIL | Energies | 100 | 10,289 | 0.514 | 1.90 | 0.1 |
| US500 | Indices | 1 | 7,821 | 39.11 | 2.55 | 0.01 |
| DE40 | Indices | 1 | 28,225 | 125.98 | 0.70 | 0.01 |
| JP225 | Indices | 1 | 436 | 344.70 | 45 | 1 |
| BTCUSD | Crypto | 1 | 82,889 | 414.45 | 0.24 | 0.01 |
| ETHUSD | Crypto | 1 | 2,505 | 12.52 | 7.98 | 0.01 |
Lots are rounded down to the instrument's volume step. Vanto feed snapshot, 10 October 2026.
Three points follow from the table. First, the lot figure says nothing about size or safety on its own: 45 lots of JP225 and 0.04 lots of XAUUSD both risk about USD 100 at this stop, because JP225 has a notional of about USD 436 per lot and gold about USD 419,451. Second, the minimum volume sets a floor on the risk that can be taken: JP225 trades in whole lots, so one lot is the smallest position on that symbol. Third, a stop placed by habit in points, such as 50 points everywhere, means a 5 pip stop on EURUSD, USD 0.50 on gold and 0.0007% on JP225, which are not comparable distances. Margin and leverage by class are covered in what is leverage in trading, and what is a lot and what is minimum lot size in trading explain the volume fields.
The same arithmetic runs the other way. A trader who holds 0.10 lots of XAUUSD with a stop USD 20 away risks 0.10 x 100 x 20 = USD 200. Leverage amplifies gains and losses on that position equally, and the stop-loss is the tool that fixes the loss in advance, not a way to reduce it for free.
Where Do Traders Place a Stop-Loss?
Stops are placed by one of four methods: a fixed percentage or amount, a technical level, a volatility multiple or a time limit, and each answers a different question about where the trade is wrong.
| Method | Stop is placed | What it assumes |
|---|---|---|
| Fixed amount or percentage | A set loss, such as 1% of the account | The risk budget decides the distance |
| Technical level | Beyond a swing high or low, or a support or resistance level | A break of the level means the trade idea is wrong |
| Volatility multiple | A multiple of the average daily or hourly range | The stop should sit outside normal noise |
| Time stop | The position closes after a set period | An idea that has not worked by then has failed |
A stop inside normal noise is triggered by routine movement and gives a loss with no information; a stop far outside it needs a small position to keep the risk the same, as the table above shows. Placing it just beyond a round number or an obvious swing point is common, so such levels tend to hold clusters of stops, and a move through them can fill with more slippage. None of these methods is a recommendation. Each is a way of choosing the distance, and the distance then sets the lot size through the formula above.
The ratio of the target distance to the stop distance is the subject of what is the risk-reward ratio.
What Happens When Price Gaps Through a Stop-Loss?
When price gaps through a stop-loss, the order executes at the first available price after the gap, so the realised loss is the planned loss plus the gap beyond the level.
Gaps come from the weekend or daily close, scheduled data releases and central bank decisions, and thin liquidity. A worked example with illustrative numbers: a trader holds 0.10 lots of XAUUSD long from 4,200.00 with a stop at 4,180.00, a planned loss of 20 x 100 x 0.10 = USD 200.
| Event | Exit price | Loss per ounce | Loss on 0.10 lots | Versus plan |
|---|---|---|---|---|
| Orderly move, filled at the level | 4,180.00 | USD 20.00 | USD 200 | As planned |
| Fast move, 2.00 of slippage | 4,178.00 | USD 22.00 | USD 220 | 10% more |
| Weekend gap, reopens at 4,160.00 | 4,160.00 | USD 40.00 | USD 400 | Twice the plan |
The stop-loss did what it is built to do in each row: it closed the position at the first price available after the level was crossed. It did not hold the loss at USD 200. The general mechanics of slippage are in what is slippage in trading, and the same behaviour applies to any CFD with a market-execution stop, including indices at the open and crypto during sharp moves. Class-specific context is in how to trade gold, how to trade the S&P 500 and how to trade Bitcoin.
When a Stop-Loss Does Not Work as Expected
A stop-loss fails to match the plan in five recurring situations, and four of them are mechanical, not a fault of the platform.
- Gaps. The exit is the first available price, not the level.
- Short positions and the spread. The stop fires on the Ask, so a wide spread triggers it earlier than the chart's Bid line suggests.
- Stop set too close. MT5 rejects a stop closer to the price than the symbol's minimum stop distance with an "Invalid stops" message, and a stop inside normal noise is hit by routine movement.
- Stop moved away. Widening a stop after the price approaches it removes the cap the order was meant to provide.
- Stop-out first. If margin level falls to 50% before the stop is reached, the platform closes positions at the account level. That happens when the combined size is large against the equity, as worked through in what is the stop-out level in trading.
A position without a stop-loss has no automatic exit until the stop-out, which on a large position can be most of the account away.
Frequently Asked Questions
What is the difference between a stop-loss and a stop-out?
A stop-loss closes one position at a price the trader chose, while a stop-out is the platform's closing of positions when the account's margin level reaches 50%. The first is an order placed per position; the second is a safety rule applied to the whole account.
Does a stop-loss guarantee the exit price?
No. A standard MT5 stop-loss becomes a market order when triggered and fills at the next available price, which can be worse than the level in a gap or fast market. A guaranteed stop is a different product that some brokers offer separately.
Does a stop-loss work when MT5 is closed?
Yes. The stop-loss level is stored on the trade server and is executed there even if the terminal is closed. Only a trailing stop depends on the terminal to keep moving.
Why did my short position stop out when the chart never reached the level?
A short position closes by buying, so its stop-loss triggers on the Ask price, which is the Bid plus the spread. The chart shows the Bid line by default, so the Ask can cross the level while the line stays below it.
Should a stop-loss be a percentage or a fixed number of pips?
Neither is correct for every instrument. A fixed number of pips or points means very different amounts and very different shares of the price across forex, gold, indices and crypto, so many traders derive the distance from the amount they are prepared to lose and set the lot size from it.
Can a stop-loss limit the loss to exactly the amount planned?
Only if it fills at its level. The planned loss is the distance to the stop times the position size, and slippage or a gap adds to it. That is why the amount at risk is better treated as a minimum for the loss on a gapped trade, not a ceiling.
Calculate the Numbers for Your Own Stop
The trading calculator shows contract size, minimum volume and margin for every Vanto symbol at the live price, which gives you the inputs for the position-size formula above.
Risk warning. Trading securities, futures, options, and contracts for differences are complex financial instruments that require knowledge and understanding. Prices can fluctuate significantly and securities may become valueless. Investors may incur losses exceeding the potential for profits. Trading on margin can result in losses greater than the amount initially deposited. Past performance is not necessarily a guide to future performance. The information in this article is for educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any financial instrument. Consider whether CFD trading is appropriate for your circumstances and seek independent advice if necessary.