Stop loss is a limit that acts as a safety valve if something starts to go wrong with a trade or a position. In other words, it is a transaction waiting to execute if the currency or price breaches (or reaches) a particular level – as the bank does not want to take exposures beyond that price point. So losses will be booked and the position will be squared off at those levels. This is usually done, when bank are expecting some news that may affect the prices adversely or of the asset or markets in general are volatile.