Knowledge of the Day: Stop-Loss Order
An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor's loss on a security position.
Setting a stop-loss order for 10% below the price you paid for the stock will limit your loss to 10%. This strategy allows you to determine your loss limit in advance, preventing emotional decision-making. It's also a great idea to use a stop order before you leave for holidays or enter a situation in which you will be unable to watch your stocks for an extended period of time.
Did you know? In case the purchase is squared-off the same day (intra-day) then brokerage does not apply on the second side (i.e. no brokerage while selling if the stock is sold on the very same day it was purchased). Guess that is incentive enough for some intra-day dabbling 👼
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