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What is Stop-loss and how you can use it to limit losses in trading?

Simply put, a stop-loss is designed to limit an investor's loss on a stock. Setting a stop-loss order for 15 per cent below the price at which you bought the stock will limit your loss to 15 per cent.

Avdhut Bagkar  |  Mumbai 

Stop-loss is a technique with which a trader can mitigate or stem their losses, if any. While placing a buy/sell order, the trader can choose a “stop-loss order” with a certain price -- just in case the trade goes against the individual's assessment -- and when the stock price arrives at that certain level, the order gets executed as a market order, thus saving the trader from extensive losses.

Simply put, a stop-loss is designed to limit an investor's loss on a stock. Setting a stop-loss order for 15 per cent below the price at which you bought the stock will limit ...
First Published: Thu, February 20 2020. 09:35 IST