Stop-loss
In short A stop-loss is a preset order that sells a position once its price falls to a chosen level, aiming to limit how much a single trade loses.
A stop-loss is an instruction to sell an asset automatically when its price falls to a level you set in advance. This entry covers the version for a long position, where you own the token. Short sellers use the mirror image, a buy stop that triggers when the price rises. The goal is to decide your maximum acceptable loss before emotions get involved.
On a centralized exchange, a stop order sits dormant until its trigger condition is met. Depending on the venue, that condition may be based on the last traded price, a mark price, or an index price built from several markets. Once triggered, the order becomes either a market order, which sells at whatever price is available, or a limit order, which sells only at your limit price or better. A stop-market order almost always executes but may fill below your trigger, while a stop-limit order protects the price but may not fill if the market gaps through it.
On-chain it works differently. A swap on a decentralized exchange only happens when someone submits a signed transaction, so most DEXs on Solana, BNB Chain, Base, and Ethereum have no built-in stop-loss. Some aggregators and bots offer conditional orders by watching prices off-chain and executing the sale for you, either through a pre-signed authorization or a smart contract holding your order, so a bot need not have full signing access to your wallet. You still trust their uptime, their price source, and the permissions you granted.
For small tokens, liquidity is the biggest problem. In a thin pool your own sale can move the price a lot, so you may exit well below the trigger. Congestion can delay the transaction, and a honeypot token may not let you sell at all, which makes any stop-loss useless. Very tight stops also get hit by brief wicks on volatile tokens, selling you out just before a rebound.
Before relying on one, check where the order actually lives, whether the service is custodial, which price it triggers on, and what slippage settings it uses. Compare your position size to the pool's depth, and test that the token can be sold with a small amount first. A stop-loss aims to limit risk but never removes it.