How to place stoploss orders

A stoploss order is a limit order placed by an investor to a broker to either limit downside risk or to protect profits on an exisiting investment. A stoploss triggers a market order to buy or sell once a preset price is reached. Stoploss limit oder types vary according to the selected market strategy:

Buy Stop Order

A buy stop order is an order to buy a financial asset if it rises to or above a pre-determined level. It is used either to initiate a fresh long position when an investment breaks above an important resistance level or to protect an open short position against additional losses.

Sell Stop Order

A sell stop order is an order to sell a financial asset if it falls to or below a pre-determined level. It is used either to initiate a fresh short position when an investment breaks below a important support level or to protect an open long position against additional losses.

Buy Limit Order

A buy limit order is an order to buy a financial asset if its price falls to or below a pre-determined value. It is used when the purchaser assumes the asset will increase in value.

Sell Limit Order

A sell limit order is an order to sell a financial asset it its price increases to or above a pre-determined value. It is used when the seller assumes the asset has reached its target price and views further upside potential as unlikely.