What is Stop Loss in share Trading?

Online share trading can lead to you encountering unfamiliar terms such as stop loss and stop-loss order. Let's take a closer look at what stop-loss is. How does stop loss work in the share market?

Stop Loss Meaning:

A stop loss is an order that automatically buys or sells securities when a certain price has been reached. The order is executed automatically in stop loss. Investors use this method to limit their losses. This concept of stop loss is applicable to both short-term and long-term trading. The stop-loss order instructs the broker or agent to sell the security at a specified price.
This is a tool or concept that can be used to plan short-term investments. This is great for investors who are too busy to keep track of securities daily. This allows the trade to be automatically initiated and the limits can be set in advance.

Benefits of Stop Loss:

• It protects against excessive losses
• Investors can have a better handle on their accounts
• Multiple deals can be monitored
• Automatically executed
• Simple implementation
• This allows you to choose the risk level you want to take.
• Promotes discipline

What is Stop Loss in Share Trading?

It is crucial to use the correct sell stop and sell limit limits in order to reduce losses. Investors can simplify the decision-making process by using stop-loss trading tools. This is also called stop order, stop market order or stop order. There are many types of stop-loss orders, each with a different purpose.

• Sell Stop Order: This is used to limit losses and protect gains when stock prices fall. It is set at a price below the current market.
• Buy Stop Order: This is used to buy stocks to protect against loss and/or gain from a short sale. It has a stop-price that is higher than the current market price.
• Trailing Sell Order: This stop parameter is calculated based on the trailing decrease in stock price. This is used to maximize profit when stock prices rise or minimize loss when stock prices fall.
• Trailing Buy Order: This stop parameter is calculated based on the trailing price change. This is used to maximize profit when stock prices fall, and minimize loss when stock prices rise.
• Stop-Limit Order: This is an order that combines a limit and stops order. When the stop price has been reached, the instruction will be a limit order to purchase or sell securities at that price.

It is very simple to set up a stop-loss order. Simply visit your application and click on the "Add Stop Loss" button. You can then choose the amount you want or set a rate.