It doesn't have to be specifically stop-related. In any given position one should have an idea of the loss that could/would be taken if the market were to go against the position in question. A stop can provide that. In other cases it could just be a funtion of the position, like the defined maximum loss of a long option position, or the downside potential of a spread trade.
I suppose it could be thought of in terms of Value-at-Risk (VaR), but most traders probably aren't going to get too deep in to that concept.
If you only had $100 to trade with (note I didnt say invest) then you would be unlikely to be able to put it with more than one broker and in most cases you wouldnt be able to trade with that amount as most brokers require substantially more. Whatever you think most people use one brokerage to trade with. Some may use more than one account but the majority simply dont.
I meant that metaphorically, would anyone put a 100% of that risk capital with any one broker alone.
If he puts that 100% with one broker, and that broker closes shop, or gets into ongoing litigation problems, or there is a personality conflict between the broker and the trader, and other scenarios. Not that such things will happen, but if a trader knows what is diversify surely he would know what is don't put all your baskets on one egg?
Maybe so but most only use one broker. If you discount spreadbetting companies then you would have to have quite large funds to have more than one brokerage account. Also if you were to trade US stocks intra-day then you would need to find $25K for each account you wanted to open.
In my view it is good policy to check the credentials of the broker you choose. With IB, for example, you have one of the most financially stable in the whole world and that is good enough for me.