What is stop loss order? Benefits of using stop loss in the market

Published By Ayesha Jaiswal, 12 Sep 2017



What is stop loss order? Benefits of using stop loss in the market

Stop loss order used as the best risk management tools in the stock market. When you go for trading in the stock market you will come across with the various market terms in the market. A stop loss order basically an automatic order of trade given by a trader to its broker. The Stop-loss order will be executed when the price of the specified stock will fall and stop at the level which is pre -mentioned in a trader’s stop-loss order. Many investors grab the expert stock recommendations and stock tips from the financial market specialist with the aim to improve profitability.


Stop loss is a technique which is used by traders to control his loss if the price of an underlying asset will fall below a certain level.


How to set a stop loss order


Stop Loss order is very easy to set. When you start a deal, you will see an option to ‘Add Stop Loss’. Just choose an amount which you actually want to lose on a particular deal. You can also select to add a take profit order. The real challenge with Stop Loss is to determine which rate is to set in a specific deal, but after some time you will find out that stop loss orders are extremely useful and beneficial for you.


Advantages of using stop loss order -


1.The biggest benefit of using a stop loss order is that the traders don’t have to monitor on a regular basis that how well your stock is performing. This is especially convenient when you are on a tour or in a situation that you could not monitor your position for a longer period of time.


2.It help traders to control their small losses to become destructive large one. It offers protection from excessive loss.


3. An investor can control their risk bearing level by using stop loss orders. It manages losses of the traders in the market by allowing them to decide what amount they are actually willing to risk.


4.One of the main advantages of using stop loss order is their ability to “save a trader from negative balance” it prevents a trader's account from going into minus.


5.Stop loss protects an investor from the sudden mental shock. it also provides emotional support to the traders when the market situations go negative.


Conclusion


Using stop loss order can be the best way to control loss in share market. Also it is a good approach to risk management. For better results, an investor can refer stock tips and recommendations, mcx tips and binary option trading tips from financial market experts to use stop loss order in a right way.