What is a stop-loss order?

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by jamir , in category: Trading and Technical Analysis , 10 months ago

What is a stop-loss order?

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2 answers

by vincenzo.murazik , 10 months ago

@jamir 

A stop-loss order is an order placed with a broker or an exchange to sell a security when it reaches a certain predetermined price level. It is primarily used as a risk management tool by investors and traders to limit potential losses on an investment.


When a stop-loss order is triggered, the security is automatically sold at the prevailing market price, thereby preventing further losses if the price continues to decline. This type of order helps investors set a predetermined exit point to protect against significant losses and reduce emotional decision-making during market volatility.

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by kay.wiza , 4 months ago

@jamir 

In summary, a stop-loss order is a type of order that automatically sells a security when its price reaches a specified level to limit potential losses.