Use this tool “Stop Loss”

Today we will talk about a topic that is considered by many, one of the concepts that everyone should learn when they start in the world of exchanging, since knowing its definition, what it is used for and how to place it is a tool that can tip the balance in your favor, the stop loss.

But what is stop loss?

To begin with, let's define what is the stop loss, and this is nothing more than the level of pressure at which the operation will be closed if it develops against me, that is, it will close automatically at a level that we can predefine before entering the operation.

Another way to visualize it is to see it as a type of stock market order that is activated once the price has reached a certain price, it is a kind of insurance, for example, suppose you bought a stock a few months ago for 6 dollars and today the price is for 8 dollars.

If you place a stop misfortune at the $7 line, it means that the moment the stock falls again, the sell order will be automatically triggered. In short, it is an automatic sell order with a limit that we can determine.

In addition to this functional definition of stop misfortune or stop loss, it also has a more relevant function, that is to say, more profound, and that is that it must be placed in a place where our unique thought of exchanging will no longer be fulfilled.

Since

if the price reaches that point, it means that our thought is wrong, taking into account this point, it is also important to know that the stop misfortune, behaves in a certain way and it will always depend on the temporality at which it is working.

Since it is not the same to make operations in a 15 minutes chart, in which the stop misfortune must be placed below or above the resistance support, relevant of 15 minutes, then in a daily chart or in an operation that will last a standard of weeks or even a month.

For the second case, the stop must be much wider and must take as reference the daily or even weekly resistances or supports, therefore, those stop misfortune child much wider.

The stop misfortune must always be adapted to the temporality in which we are working since the stop misfortune is an intrinsic element to the order, either buy or sell, and that will allow us to take action with respect to losses if they were to occur and on an acceptable scale.

When our thought of exchanging is no longer valid and according to a risk that we can predefine, that is basically the stop misfortune.

How important is it to use?

 Read: What are ETFs and ETCs

Explaining the foremost we can notice the importance of the stop misfortune tool, to cut the losses, as to give us indications also about our criterion is correct or not, so that the operation is profitable.

Therefore, we can recommend that you use this strategy of stop misfortune in your operations in order to predetermine a margin in which you avoid being harmed in your operations.

What is Order End Loss and how is it used?

Many traders have heard the concept of "stop loss" and may wonder what exactly it means. These orders are an essential trading tool for any investor, here we explain how it works and how to use it.

What is the end of lost order?

A stop loss order is a buy or sell order used to properly manage a trader's risk. This tool is the solution to the question What should I do if my transaction goes wrong? : If you weren't expecting the price to go well and you can't cut the loss yourself, you can limit the loss by automating your portfolio cleanup.

In short, a stop loss order is a fatal outcome of your trades. If the stock falls to a specific level, it is automatically sold. These conditions are defined in advance, so the merchant will not have to spend long hours thinking about each of his purchases.

How does damage ranking work?

A stop loss order is a function that can be programmed into the trading platform. This means that you will be able to set a specific price at which your portfolio will be automatically sold. For example, $20. If the stock price falls below $20, the broker will automatically sell you the stock. This serves as protection for the investment and helps against large losses.

How to use the loss position?

Each trading platform has its own rules, but most have a stop loss order as their default feature. This means that you won't have to use a special language to apply the command ending. Here are some tips for using a loss order:

Determining the stop loss price: The first thing you need to do is to determine the stop loss price. It depends on the risk profile of the trader. If you have a low risk profile, your stop loss price should be very flattering and non-risky.

Choose a trading style: The second step is to choose a trading style. It depends if you want to trade passively or actively. If you are one of those people who prefer to limit their investment time, then the passive style will be for you. If you want to be more active in the market, you surely want more active planning. Both options are allowed with the use of a stop loss order.

Place the order: Once you have set your stop loss price and your trading style, you can place the order. This can easily be done from any modern trading platform. You just need to select the stock for which you want to set the order and determine the price. Alternatively, there are also stop loss calculators on major broker websites that can help you make better decisions based on factors such as risk and price.

The advantage of the developers is the loss of order

A stop loss order is a very useful tool for all traders, whether beginners or experts. This tool can help you make better use of your investments and can be used to:

Risk Management: This tool makes you more aware of the potential risk in trading. This means that you now know how much you stand to lose before you buy or sell. A good knowledge of investment risk is always recommended.

Time Management: Once you set the order, you don't have to worry about it anymore, so you can spend the time you used to looking at other things.

Gain Protection: This tool can also be used to gain exit skills. This is useful when you want to sell the root at a certain price to increase your profit. These orders are so useful to get the best price to sell the order.

conclusion

Using stop loss orders can help improve the fundamentals of your trading strategy. This tool is one of the keys to having a diversified portfolio. Using it responsibly can ensure that risk is properly managed and your profits are maximized. If you still have doubts, you can consult a trading professional before you start trading. A lot of information is also available on how to use this tool, so don't be afraid to study it. Although using limit loss can be intimidating for some traders, with a little practice you can use it effectively and safely.