Stop Loss Order

Placing order with your broker, is the first step you take, after you create your 'Trading Action Plan', based on your own technical or fundamental research. Before you can start buying and selling stocks, you must know the different types of orders and when each one is appropriate.

They are so called because, they are typically entered after a position is created, to stop the loss to a minimum, if the trade goes against you.

When you are having a long position, a sell stop order is placed. Here a trigger price is specified below the purchased price, which when touched a market sell order is released to the system to square off the position.

Similarly, When you are having a short position, a buy stop order is placed. Here a trigger price is specified above the sold price, which when touched a market buy order is released to the system to square off the position.

These orders are also best used, to buy a stock above the resistance or to sell a stock below the support, when they are breached.

Compare this with other type of orders:

• All or None Order
• GTC Order
• GTD Order
• IOC Order
• Limit Order
• Market Order
• Stop Limit Order
• Minimum Fill Order
• One Cancels Other Order
• Market on Close Order
• Limit on Close Order
• Market on Open Order
• Limit on Open Order
• Market If Touched Order
• Iceberg Order
• Fill or Kill Order

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