A market stop-loss order triggers a market sell when price reaches the stop price — guaranteeing execution but not price. In fast-moving markets or at market open after a gap, the execution price can differ substantially from the stop trigger price (slippage). A limit stop order triggers a limit sell at or above a specified price when the stop is triggered — guaranteeing price but not execution (the order may not fill if price gaps past the limit). For most individual stock positions, the market stop is preferable because execution certainty matters more than the small price improvement that a limit stop might provide, particularly in crisis scenarios where immediate exit is most important.

Mental stops (no order entered, just a private decision to exit if price reaches a level) rely entirely on behavioral discipline — which is precisely what fails in actual losing situations. Research on trader behavior shows that mental stop-losses are consistently violated: investors rationalize, lower the stop, and convert a managed loss into an uncontrolled position. For investors who know they struggle with this discipline, hard stops entered as actual orders provide the mechanical enforcement that eliminates the decision in the moment of emotional stress.

Technical stop placement anchors the stop below a specific chart structure: below the most recent swing low, below a key moving average (50-day, 200-day), or below a support level. The logic: if price breaks this structural support, the thesis for holding the position is invalidated. Technical stops are adaptive to market structure rather than arbitrary — a stock with a clear support level at $45 logically gets a stop below $44.50, not at a fixed 8% below the entry price.

Volatility-based stops (2-3× ATR below entry) set the stop outside the range of normal daily volatility — reducing premature stop-outs from noise. Fixed percentage stops (8%, 10%, 15% below entry) are simple and consistent but do not account for different volatility profiles across different securities. A 10% stop on a 15% annualized volatility stock covers roughly 2 standard deviations of normal daily moves — reasonable. The same 10% stop on a 40% annualized volatility stock covers only about 0.8 standard deviations — it will be triggered by normal fluctuation far too often.

Trailing stops move upward with price, locking in gains as a position advances. A 20% trailing stop on a stock that has risen from $50 to $100 sits at $80 — it rises to $90 if the stock reaches $112.50, protecting 80% of the gain. The Chandelier Exit (3× ATR below the highest close since entry) is a systematic trailing stop that adapts to volatility — providing a wider trail for more volatile stocks and tighter for calmer ones.

The primary behavioral benefit of trailing stops is converting potential paper gains into protected gains without requiring active management decisions. Investors who have difficulty taking profits ('letting winners run' vs. 'booking profits' tension) can resolve the dilemma with a trailing stop: the position runs as long as the trend continues, and the stop triggers an automatic exit when price pulls back by the specified amount. This systematic approach removes the agonizing real-time decision of when to sell a winning position.