For most traders, the stop loss is the safety net of your trading account. We all know that very often once we are in a losing trade, we are powerless to take the loss there and then and get ourselves out. By placing the stop loss, it prevents our emotions from taking.
There are many ways to determine where you should place your stop loss level. Some goes by a fixed percentage movement of the market price, while some place it at an offset level from their entry price.
For me, I use the market structure to determine where the stop should be. In a series of up moves when the market rallies, I look at the prior support levels as key price points. If I am to enter a trade (say at 510.0 for Emini Russell), I will place my stop loss at a price JUST below the last support (say 507.8 is the support, the stop loss will be at 507.7) as I believe that if the price is to continue its upmove, the probability of price breaking the last support is very low. And IF price is to break the last support, the chances of it going my way is very much diminished and that reason is enough to tell me to take the loss.
Taking a loss is never easy. But I am a firm believer of capital preservation as being the key to long term trading success. By accepting the last loss quickly, it frees you up to take advantage of the next opportunity.