A Stop Loss Order is a trading tool used to limit potential losses on an investment. It automatically sells a security when its price falls to a specified level, helping investors manage risk. For example, if an investor buys a stock at $50 and sets a stop loss at $45, the stock will be sold if its price drops to $45, preventing further losses. This order is particularly useful in volatile markets, where prices can fluctuate rapidly. By using a stop loss, traders can protect their investments without constantly monitoring the market. It is a key strategy for both novice and experienced investors in managing their portfolios.