Stop-loss in Stock Markets – For a beginner in the stock market who wants to understand the concept of stop-loss. Let’s see the trading with Stop-loss in the stock market :
Stop-loss is a method used by an investor to limit his losses. It works as an automatic order given by the investor to his broker to sell a security as soon as it reaches a certain predetermined price.
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For example, let’s say Raj buys 50 shares in “CanaraBank: at the rate of one thousand rupees per share. Shortly, the share price falls to 960 rupees per share. Raj wants to limit his losses; so he inputs a stop-loss order at nine hundred and fifty rupees. If price corrects further to nine hundred and fifty rupees, his broker Angel Broking will sell the shares to prevent further losses.
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On the other hand, if the share price jumps to one thousand four hundred rupees per share, Raj would want to hold on to his shares and not lose his advantage; so he inputs a stop-loss order to sell the shares if the price falls to one thousand three hundred rupees. By placing the stop-loss order, Raj protects his investments by retaining his gains and preventing potential losses.
concept by AngelBroking
