Stop losses are placed by traders either to limit risk or to protect a portion of existing profits in a trading position. It is actually quite simple, it is just important that you place the stop loss order at the time of placing the order itself. Placing a stop-loss order is ordinarily offered as an option through a trading platform whenever a trade is placed, and it can be modified at any time. Traders typically place stop-loss orders when they put trades. Initially, stop-loss orders are used to put a limit on potential losses from the trade. For example, a trader might enter an order to buy SBI at Rs.255, along with a stop-loss order placed at Rs.250. This limits the trader's risk of loss on the trade to Rs.5 only. Of course, based on market volumes, it could be slightly here and there.