You set your stop loss as a safety when you are sure and not sure about the direction a trade will go. If you are selling, your stop loss should be set above the point at which your trade was executed, so that your capital will be save if the trade buys instead of sells as predicted. If you are buying, stop loss should be set below the point of execution of the trade. The ability to be able to detect and correctly set up stop loss in each trade will help the trader ensure that they do not loose too much to a trade if it does not go as planned.