PDSnet Glossary

Term

Categories

Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

Versions

Name	synonyms = 1, variations = 2, abbreviations = 3

Publish: (0 = no, 1 = yes)

Definition

To sell out of a share because it has reached or passed a pre-set stop-loss level in terms of a defined stop-loss strategy. A stop-loss strategy involves setting a price level at which you will sell a share, usually as a percentage decline from the highest price which the share (or other security) has reached since you bought it. For example, the simplest 10% stop loss means if you buy a share for 1000c and it falls to 900c (i.e. 10%) you place a market order to sell it (i.e. you stop out) on the next trading day. In this way you can protect the bulk of your capital for re-investment. A stop-loss strategy depends on their being sufficient volume traded to accommodate your sale.

Edit Glossary Term