Stop Loss Order
Stop Loss Order is the limit a trader sets to minimize their losses on a position. Traders use Stop Loss as it automatically closes a position once the price falls to the one set by the trader. Linked Limit and Stop Orders The two main order types linked to open positions or pending orders are Stop Loss and Take Profit.
- Stop Loss order limits possible losses. It is set at a price lower than the opening price of the position or of the pending order execution.
- Take Profit order secures gains already acquired. It is set at a price higher than the opening price of the position or of the pending order execution.
- Percentage Method – determine the percentage of the stock you are willing to risk before you exit the trade.
- Support Method – determine the security’s most recent level of support and place your stop loss just below it.
- Moving Average Method – apply a moving average to your stock chart and place your stop loss below it.
Put your knowledge into practice
Choose the financial instrument that suits you