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.
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.
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