Do Stop Losses Actually Help Traders Make More Money?

Almost three-quarters of trades placed by UK customers on Capital.com are executed without stop-loss orders, raising an interesting question about whether using them actually makes traders more successful.

According to Capital.com’s latest Pulse Report, which analysed more than 80 million closed trades globally during the first half of 2026, just 24.71% of UK trades had an automated stop loss attached.

CFD UAE traders were the least likely to use stop losses across the seven countries analysed, attaching them to just 18.30% of trades, followed by British traders at 24.71%. German traders were the most likely, using them on 34.06% of trades, followed by the Netherlands at 32.81% and Poland at 32.16%.

But does using a stop loss actually improve your chances of making money?

Can stop losses make you a better trader?

A stop-loss order automatically closes a trading position when the market reaches a predetermined price. The idea is simple: rather than letting a losing trade run indefinitely, traders decide how much they are prepared to risk before entering the market.

For example, a trader buying a stock at £100 might place a stop loss at £95, aiming to limit their potential loss to around 5%, although the actual loss could be greater if the market moves quickly.

Stop losses are particularly important when trading leveraged products such as CFDs and spread bets, where relatively small market movements can result in significant losses.

However, while stop losses can help control risk, they don’t necessarily make traders more profitable.

One of the biggest problems is that markets rarely move in straight lines. Prices frequently fall before recovering, meaning a trader can be stopped out of a position that subsequently moves in their favour.

This is particularly common in volatile markets such as cryptocurrencies, commodities and major stock indices.

Traders who place their stops too close to the market may find themselves repeatedly taking small losses, even when their broader market predictions are correct.

Is it better to win more trades or lose less money?

One of the most important distinctions in trading is the difference between having a high percentage of winning trades and actually making money.

A trader who wins 70% of the time can still lose money overall if their losing trades are significantly larger than their winning ones.

Conversely, a trader who wins just 40% of the time can be profitable if their average winning trade is substantially larger than their average loss.

For example, a trader who makes £200 on four winning trades but loses £100 on six losing trades would still finish £200 ahead, before trading costs.

This is where stop losses can make a difference. By controlling the size of individual losses, they can help traders maintain a more favourable relationship between risk and reward.

But their effectiveness depends on how they are used. Setting arbitrary stops without considering market volatility, position size and the underlying trading strategy can be counterproductive.

What does Capital.com’s research actually prove?

Capital.com’s stop loss research suggests that traders in some countries are more inclined to use automated risk-management tools than others.

Rupert Osborne, CEO UK at Capital.com, said:

“The data across H1 2026 shows that markets differ in how consistently traders define their exit conditions before a position is opened. That difference matters.”

However, the report does not establish whether traders who use stop losses actually make more money than those who don’t.

It doesn’t compare profitability, average losses or account performance between the two groups, meaning there is no evidence from this particular study that German traders are more successful than British traders simply because they use stop losses more frequently.

There are also other ways to manage trading risk, including reducing position sizes, diversifying exposure and using hedging strategies.

Professional traders may use a combination of these techniques rather than relying exclusively on automatic stop-loss orders.

Should traders always use a stop loss?

For retail traders using leverage, stop losses can be an important part of a disciplined risk-management strategy. They can prevent a manageable loss from becoming significantly larger, although they cannot eliminate the risk of slippage or guarantee a maximum loss.

However, their usefulness depends on the type of trading being undertaken.

A long-term investor holding a diversified portfolio may have little reason to use automatic stop losses, particularly if they are prepared to tolerate short-term market volatility.

A day trader using leverage, on the other hand, may need much tighter controls over individual positions.

Ultimately, the question isn’t simply whether traders should use stop losses, but whether they have a sensible plan for managing losses when markets move against them.

Capital.com’s research shows that most British trades are placed without automated stop-loss protection. What it doesn’t yet tell us is whether those traders are making more or less money as a result.

Capital.com also offers guaranteed stop losses that are filled even if the market gaps through your price.