What is stop loss in stock trading

Question

What is stop loss in stock trading

Answer 1

It is very good instrument specially for Intraday players. For example  let us assume u buy a stock at Rs 100/- and u place a sell order at Rs 105/-, u place a STOPLOSS at Rs 98/- in the above case if the mrket price goes up no problem it will be sold at 105/- but if the case was the other and the price comes down the stoploss will be activated and the stock will be sold at Rs 98/-. The beauty of STOPLOSS is u can limit ur losses also.try to use it in practical.Have a nice trading time

Answer 2

stop investing in stocks is called STOP LOSS

Answer 3

its basically the maximum loss u r able 2 bear in a single transaction

Answer 4

Stop loss is a stage you prefix for any trade to conclude to minimize your loss.  When the price touches the prefixed stage, automatically transaction will be concluded at that point without your  taking any action. It is very important in stock trading to have stop loss.

Answer 5

It is to limit the loss you make on a trade.  If you buy a stock for 100p and you set a stop loss at say 90p, when the price hits 90p it will automatically be sold.  Obviously if a share collapses overnight or falls fast, you could end up getting a lot less than this.  

Also if it dips for a couple of minutes to 90p and quickly recovers, which often happens, you do lose out.  Basically it is to protect you from a massive loss and saves you having to watch the price constantly so if you don't do this for a living, I guess a stop loss would be sensible.  

Have to say, I never use them.  Investors often complain about them and you always find them accusing the MMs of dropping the price on a share to trigger automatic stop losses so I guess if you do use them, set them at irregular amounts, rather than £1 and so on.

Answer 6

you can set your trades for a stop loss in your program so if your losing so much you can have your trade stop at a certain range or a certain loss.  

Answer 7

um . . . . terrible answer so far.

A stop loss order is placed under the current market "bid". There are two types; the most used one triggers a "market" order once your stock price drops to the order you placed. This does NOT assure you will get out at that price, just that you will sell your stock. Let's say you put a stop loss order in at 25 and the stock drops without subsequent trades at 10 . . . you get 10. The other is a "stop limit" price which says your order becomes a limit order if the price reaches your order. Let's say, again you put in a stop order to sell at 25 and the stock drops to 10 with no subsequent trades . . . . you do not get out at all.

Generally speaking stop loss orders are foolish. Why would you want to sell your stock for less than it is trading for?