Plain-English definitions, reviewed by an independent investor
Stop-Loss Order
A stop-loss automatically sells a holding once it falls to a set price, capping further damage.
A stop-loss automatically sells a holding once it falls to a set price, capping further damage.
(Triggers a market sell at a preset drop)
Why it matters
It is the disciplined exit that removes emotion from cut decisions.
Common confusion
In a gap-down it can fill far below the stop; it limits, not eliminates, loss.
Frequently Asked Questions
Does stop-loss guarantee my price?
No. In a fast drop it fills at the next available price, possibly lower.
Trailing stop?
A stop that rises with the price, locking in gains while still limiting downside.