You don’t want to fall into the trap of using stop/losses. They look good on paper but not so much in reality. With a stop/loss you set a floor price for a stock. If it’s reached a sell order is placed. The problem becomes finding a buyer. Just because you place a sell order doesn’t mean there’s a buyer at your price. The eventual price you get may be far lower than the level you set as the floor. For the first time this year the Dow and S&P 500 have been down on four consecutive trading days and are down 9 of the last 11 trading days. Investors may think they’re protecting their downside with a stop/loss but it may end up being a hard lesson to learn when they read the final price on the trade confirm.
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