what is stoploss in stock trading?

Answer 1

Stop loss order is exactly what 1sweetie had mentioned. It is critical for a serious stock traders. but sometimes, a share will reverse and go on to new highs after you have sold because the price hit or fell below your stop loss level. Experienced stock traders recognize this to be a cost of trading. But most beginners, however, will count this as lost profits and begin to doubt the usefulness of stops.

and, your first stop should be set before you enter a trade. This is used to limit your initial risk. At this time, you should set both a dollar stop and a time stop. The longer you are in the market, the riskier your trade becomes.

Answer 2

A stop loss is the dollar amount below the underlying stock at which point you no longer wish to lose money and decide to get out - sell. Be careful though not to set your stop loss too close to the current price. i.e. buy at $18.00 stop loss at $17.75 it's not uncommon for a stock to drop off a bit (and believe me 25 cents is not much of a move downward) before it rallies up again. Particularly if the stock is a good one. I have been stopped out of some really good positions because my stop loss was too tight. One the other hand stop losses have allowed me to keep some good profits while I could have stayed in and been dragged down to where I began. Personal comfort for risk is the key to any stop loss position.

Answer 3

A stop loss is entered to the broker with the order or right after it's executed. Only amateurs invest/trade without using stop losses.

If you're investing and not using them....... you're making a big mistake. Read up on their use. Read 2-3 good books on investing.

Follow these rules always;
Have an "Asset Allocation Plan".
Have an "exit" plan.
Always understand what you're buying (and why).
Know your risk (before you get in).
Never take "tips" from anyone (including "talking heads" on TV, Radio,Print,Relatives & Friends).

Answer 4

A stop loss is one type of order the effect of which is reversed to your earlier order already executed.

For example,

You want to buy some shares of Reliance Industries (RIL) at 1800. You tell your broker to buy at 1800. You also give him an instruction to put a stop loss at 1775.

Now suppose, the stock price of reliance comes down and it hit your stop loss at 1775. So here your order will be executed and your shares will be sold (reverse effect) at 1775. and You will make a loss of Rs. 25. This would prevent you from making further loss on further fall of price.

Answer 5

A stop loss order instructs your broker to sell when the price hits a certain point. The purpose of the stop loss is obvious; you want to get out of the stock before it falls any farther.

Answer 6

stop loss price is which will be fixed inorder to protect the downside. example. if i buy a stock name x ar rs.100 and if i make a stop loss at rs.95. in case if the stock x reaches rs.95 automatically my instruction will get executed to sell those shares.