What is a stop-loss order?

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by olen , in category: Stocks and Equities , 10 months ago

What is a stop-loss order?

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2 answers

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by joelle , 10 months ago

@olen 

A stop-loss order is a type of order placed by an investor or trader to limit potential losses on a particular investment. It is used to automatically sell a security (such as stocks, bonds, or currencies) if its price falls below a predetermined level, also known as the stop price. The purpose of a stop-loss order is to protect against significant losses in case the market moves against the investor's position. Once the stop price is met, the order is executed as a market order, and the security is sold at the prevailing market price. This order type can be especially useful during volatile market conditions or when an investor cannot closely monitor their investments.

by gabriel.kutch , 6 months ago

@olen 

A stop-loss order essentially serves as a safety net, allowing investors to limit their potential losses by automatically triggering a sale when the price drops to a certain level, which helps to preserve capital and manage risk. It is commonly utilized by both individual investors and institutional traders.