Stop-Loss Order

A stop-loss order is a protective measure used by traders to minimize potential losses. It functions by setting predetermined “stop” and “loss” prices. When the asset’s price reaches the “stop” price, the order is triggered, and the asset is automatically sold at the “loss” price. The main objective of stop-loss orders is to safeguard against unexpected declines in the asset’s value. For instance, a trader may employ a stop-loss order for a specific company’s stock or cryptocurrency asset to ensure a sale if its price drops below a certain level from the original purchase price.