Again...stop-loss order is a type

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A stop-loss order is a type of order placed by an investor with a broker or trading platform to sell a security (such as stocks, bonds, or commodities) when it reaches a specific predetermined price level. The purpose of a stop-loss order is to limit potential losses on an investment position.

Here's an example to help illustrate how a stop-loss order works:

Let's say you purchase 100 shares of a stock at $50 per share. You're optimistic about the stock's potential, but you also want to protect yourself from significant losses. You decide to set a stop-loss order at $45 per share.

If the stock price drops to or below $45 per share, your stop-loss order will be triggered, and your broker or trading platform will automatically sell your 100 shares at the prevailing market price. This helps you limit your potential losses, as you have defined a threshold at which you're willing to exit the position.

In this example, if the stock price drops to $43 per share, your stop-loss order will be triggered, and your shares will be sold. As a result, you would have limited your losses to $5 per share (the difference between the purchase price of $50 and the stop-loss price of $45).

Stop-loss orders are a risk management tool that can help investors protect their investments by implementing a predetermined exit strategy. It's important to note that while stop-loss orders can provide protection against downside risk, they do not guarantee that you will sell at the exact stop-loss price in a rapidly changing market.

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