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Definition: Stop-loss can be defined as an advance order to sell an asset when it reaches a particular price point. It is used to limit loss or gain in a trade. The concept can be used for short-term as well as long-term trading. This is an automatic order that an investor places with the broker/agent by paying a certain amount of brokerage. Stop-loss is also known as ‘stop order’ or ‘stop-market order’. By placing a stop-loss order, the investor instructs the broker/agent to sell a security when it reaches a pre-set price limit. Description: In case of a stop-loss order, the trading company or broker looks at the trading discipline to help the investor cut losses by the current market bid price (i.e. the highest price for the stock at any point of time at which the investor wants to place a bid), and vice-versa, while selling a stock. For example, if investor ABC wants to place a bid for shares of XYZ company at a certain price point, he/she would instruct his/her brokerage to set the limit against the stock purchase. When the stock reaches the set bid price, an order will be executed automatically to purchase the same. If you already own the shares of company X and want to sell them, you would ask your broker to sell them when the price reaches at certain high or low. Accordingly, an automatic order will get triggered once the price range matches the set limits. A stop-loss order is basically a tool used for short-term investment planning. It is used when the investor doesn’t want the pressure of monitoring a security on a day-to-day basis. The trade gets triggered automatically and the limits are decided in advance. This can be very helpful for small investors.
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Which of the following order instructs the broker to sell at or below a specified price?A stop order instructs your broker to buy a stock only when it is selling at or below a specified price (or if you're selling, when it is at or above a certain price).
Which of the following orders instructs the broker to sell at or above a specified price the best answer is?A limit sell order instructs the broker to sell the asset at a price that is above the current price.
What kind of order will an investor use to buy a stock at the current price?Market Orders
These orders are the most basic buy and sell trades, where a broker receives a security trade order and then processes it at the current market price. For example, an investor enters an order to purchase 100 shares of a company XYZ Inc. "at the market".
What do you call an order that is placed to buy above the market or sell below the market at a certain price?A limit order is an order placed to either buy below the market or sell above the market at a certain price.
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Which of the following instructs the brokerage firm to buy or sell at the current market rate?
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