what is stop-loss and how is it used meet Renaud he is a beginner in the stock market and wants to understand the concept of stop-loss his friend Ashish an active trader with Angel One explains stop-loss is a method used by an investor to limit his losses it works as an automatic order given by the investor to his broker to sell a security as soon as it reaches a certain predetermined price, for example, let’s say Ashish buys 50 shares in ABC Mobile’s at the rate of one thousand rupees per share shortly the share price falls to 960 rupees per share Ashish wants to limit his losses so he inputs a stop-loss order at nine hundred and fifty rupees if price is correct further to nine hundred and fifty rupees his broker Angel One will sell the shares to prevent further losses on the other hand if the share price jumps to one thousand four hundred rupees per share Ashish would want to hold on to his shares and not lose his advantage so he inputs a stop-loss order to sell the shares if the price falls to one thousand three hundred rupees by placing the stop-loss order Ashish protects his investments by retaining his gains and preventing potential losses.
