Stock stop limits can minimize the amount of money lost on trades.
Determining stock stop limits is a skill from which most stock market traders could benefit. Stock stop limit orders bring together two separate types of trading orders. The first type is known as a limit order, which allows a trader to buy a stock at a certain price only if it reaches the stock price that she specified in advance. The second type of order that is part of a stock limit order is called a stop or stop loss order. This kind of order gives a stock investor the chance to cut her losses if the stock dips beneath or goes above the stop order price. Losing too much money on a stock is not necessary because a stop limit order can help you to cut your losses at the point where your stop limit is placed. If you learn determine stock stop limits, you can become the best stock investor that you can be.
Instructions
1. Determine your two price points. Decide on the price at which the stop order will be set so that you exit or enter the trade at that exact point once the price is reached. Depending on whether you are buying or selling, you will set your stop order price accordingly. Establish the price at which you desire to buy or sell the stock so you can set up your limit order.
2. Decide the length of time in which you want your order to remain active. Keep in mind that most orders of any kind are only valid for one trading day. If you want your order to be active for a longer period, establish a GTC (good till canceled) order.
3. Contact your stock market broker via telephone. Ask the opinion of your broker before you place stock stop limit orders. Remember that most brokerage fees that you pay will cover the professional advice you receive. Consider changing the placement of your stock stop limit orders if your broker can explain why he disagrees with your entry and exit points in a manner that makes sense.
4. Ask your broker to place your stock stop limit order. Monitor your stock trade for as long as it remains active.
