A stop loss should take into consideration the market you are trading, your trading goals, your trading time frame and your risk level.
While this is how most traders learn about and use stop orders, there are some other ways that they can be used to help your trading. For instance, you can use a buy stop order to get into a long position. If the security has been trading in a channel, or is trading in a range between support and resistance, you can place a buy stop order just above the resistance or upper channel line. While the price continues to be constrained this has no effect, but if there should be a breakout to the upside, the buy stop order will become a market order to buy, and you will get in early on the new uptrend. Even though it may seem strange to wait for the price to go up before buying, if there is no breakout then you will have saved the cost of trading.
If you're looking at a possible short position, you would do the opposite. In this case, you would set a sell short stop order under the support level, and this would trigger if the price broke out to the downside. You can see that in practice it is very similar to the protective stop loss order, which would be placed under recent support to take you out of the position if your long trade was to fail. If you are trading short, then your protective stop would be a buy stop order above the entry price.
