Stop Loss Order

In trading, a stop loss order is a type of order which allows investors to limit losses by defining a price at which a trading position is automatically closed.

Example: An investor buy 100 shares worth CHF 15 per share and select a stop loss limit of CHF 14 per share. As soon as the share price falls to CHF 14, the broker begins to sell those shares to prevent further losses.

It is important to note that a stop loss order does not guarantee that securities will be sold at the specified price. When the rate reaches or falls below the stop loss limit, the order is converted to a market order and the broker sells the shares at the best available offers. If the price falls further before the order can be filled, you may receive less than the amount indicated by your stop loss limit for all or some of your shares.

See also: Stop buy order

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