One of the most vital moves in trading is to set the stop loss. You should remember that the market will always do what it wants to do, and move the way it wants to move. Every day is a new challenge, and almost anything from global politics, major economic events, to central bank rumors can turn currency prices one way or another faster than you can snap your fingers.
This means that each and every one of us will eventually take a position on the wrong side of a market move.
Being in a losing position is inevitable, but we can control what we
do when we're caught in that situation. You can either cut your loss
quickly or you can ride it in hopes of the market moving back in your
favor.
Of course, that one time it doesn't turn your way could blow out your account and end your budding trading career in a flash. The longer you can survive, the more you can learn, gain experience, and increase your chances of success. Even if you have traded for more than six years, if you do not set a stop loss, your trades will be toasted.
adapted from http://www.babypips.com/school/stop-loss-whats-that.html
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