When you buy or sell stocks, you can use something called a stop loss, also known as a “stop-market” order. This is a way to protect yourself from losing too much money if the stock price goes down.
For example, let’s say you buy 100 shares of a stock at $50 per share. You can set a stop loss at $45, which means that if the stock drops to $45 or lower, your shares will automatically be sold. This helps you limit your losses and prevents you from losing too much money if the stock price goes down unexpectedly.
It’s important to note that stop loss orders are not guaranteed to execute at a specific price, as stock prices can change rapidly. However, they can be a useful tool for managing risk in your investments.
In summary, a stop loss is a way to protect yourself from losing too much money if the stock price goes down. It’s a type of order that gets activated when a stock’s price drops to a certain level and helps investors to limit their losses, it’s also known as a “stop-market” order. It’s important to note that stop loss orders are not guaranteed to execute at a specific price, as stock prices can change rapidly. But they can be a useful tool for managing risk in your investments.
