{"id":118,"date":"2024-05-20T12:47:50","date_gmt":"2024-05-20T12:47:50","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&p=118"},"modified":"2024-05-21T06:23:21","modified_gmt":"2024-05-21T06:23:21","slug":"stop-loss-order","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/stop-loss-order\/","title":{"rendered":"Stop Loss Order"},"content":{"rendered":"

A stop-loss order is a sort of trade order that limits an investor’s loss on a position in a security. A stop-loss order, which specifies a price at which the position will be automatically liquidated, assists investors in managing risk and protecting their capital from catastrophic losses. When the security’s market price approaches or falls below the designated stop price, the stop-loss order converts to a market order<\/a>, allowing the sale to be executed at the best current price.<\/p>\n\n\n\n

How Do Stop-Loss Orders Work<\/h3>\n\n\n\n
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  1. Setting the Stop Price<\/strong>: For a long position, investors establish a stop price that is lower than the current market price. For a short position, the stop price is higher. For example, if an investor owns a stock trading<\/a> at 500 and wishes to minimize future losses, they may place a stop-loss order at 450.<\/li>\n\n\n\n
  2. Trigger and Execution<\/strong>: When the stock’s market price falls to or below 450, the stop-loss order is triggered and converted to a market order. The stock is subse<\/a>quently sold at the best available price, which may be somewhat higher or lower than the stop price depending on market changes.<\/li>\n<\/ol>\n\n\n\n

    Benefits of Stop Loss Order<\/a>s<\/h3>\n\n\n\n