Stop-loss
A stop-loss is an instruction given to a broker to by or sell a stock to limit losses if it moves beyond a certain level.
A stop-loss is an instruction given to a broker to by or sell a stock to limit losses if it moves beyond a certain level.
For example, if you buy a share at 100p but don't want to bear losses of more than 20p (20%), you might put in a stop-loss so that if the shares fall by more than 20%, they are automatically sold. This doesn't guarantee they will be sold at 80p, though, just that the order to sell will be given at this point.
Although brokers advise having stop-losses as a safety net, it is not always a good idea to set them at a price that is too close to the price at which you bought them. This is especially important if the share is volatile, because if the reasons you bought the share still hold good, you may find yourself selling when you don't really need to.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
How ‘Bed & ISA’ could save you £15,000 over a decade
Moving your investments into a tax-free wrapper through ‘Bed & ISA’ transactions could save you thousands over the long run by cutting your tax bill
By Katie Williams Published
-
House prices hit record high, says Halifax
UK house prices rose 3.9% over the past year, with a typical property now costing £293,999. We look at which regions are seeing the strongest growth, and whether the rally in house prices will continue next year
By Ruth Emery Published