How a stop loss works
When you open a trade you can attach a stop loss at a price below your entry (for a buy) or above it (for a sell). If the market reaches that price, the platform closes the position.
Where to put it
A stop loss belongs at a price that shows your trade idea was wrong, for example just beyond a support or resistance level, not at an arbitrary number of pips. Then choose your position size so that being stopped out costs only a small, pre-decided amount.
Limitations
A stop loss becomes a market order when triggered. In fast markets or when the price gaps (for example over a weekend), it can be filled at a worse price than you set. This is called slippage. Some brokers offer guaranteed stops for a fee.