From the name itself Stop Loss order, it is telling you to stop your losses. So when you place order you cannot be 100% sure the price of the stock will move in your favor, it may move in opposite direction significantly. So to avoid your losses you can place a stop-loss at a particular price. let say you bought the stock at Rs.50, it fall to Rs.40, if you have placed a stop loss at 45 than the maximum losses would have been restricted to Rs.5. That is why it is always advisable to put the stop-losses, whenever you are trading, as in any given situation you cannot be 100% right.
