The Stop-Loss Order - Make Sure You Use It
What Is a Stop-loss Order?
It is an order placed with a broker to buy or sell once the stock reaches a certain price. A stop-loss is designed to limit an investor's loss on a security position. Setting a stop-loss order for 10% below the price at which you bought the stock will limit your loss to 10%. For example, let's say you just purchased Microsoft (MSFT) at $50 per share. Right after buying the stock you enter a stop-loss order for $45. This means that if the stock falls below $45, your shares will then be sold at the prevailing market price. (For further reading, see A Look At Exit Strategies.)
It is an order placed with a broker to buy or sell once the stock reaches a certain price. A stop-loss is designed to limit an investor's loss on a security position. Setting a stop-loss order for 10% below the price at which you bought the stock will limit your loss to 10%. For example, let's say you just purchased Microsoft (MSFT) at $50 per share. Right after buying the stock you enter a stop-loss order for $45. This means that if the stock falls below $45, your shares will then be sold at the prevailing market price. (For further reading, see A Look At Exit Strategies.)
posted by Gordengekko at 8:29 AM
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