There are two types of stop-loss orders: 1. Stop-loss orders The first is a stop-loss order to enter the market.
These orders can be used for trading breaks.
You can place a buy stop at 1.1501 if you believe/will rally further after breaking 1.1500 level.
When THE MARKET PRINTS 1.1501, YOUR BUY STOP LOSS WILL BECOME THE MARKET ORDER AND BE SETTLED at THE BEST AVAILABLE PRICE below.
If you believe that EUR/USD will continue to fall if it breaks below 1.1200, you can place a sell stop at 1.1199.
When the market prints 1.1199, your sell stop becomes a market order and is executed at the next best available price.
2. Stop Loss order Closing You can also use a protective stop loss order to close the trade when the market moves a specified amount against your position.
If YOU buy EUR/USD at 1.1500 and want to limit your risk to 50, you can place a protective sell stop at 50 below entry or 1.1450.
If you sell EUR/USD at 1.1400 and want to limit your risk to 50, you can place a buy stop at 50 above entry or 1.1450.