Set up a stop-loss order - MoneySense

Set up a stop-loss order

Familiarize yourself with an investor’s best friend.

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Unless you’re a professional trader, you can’t stay on top of your portfolio all the time. So when one (or more) of your stocks goes into a death spiral, the longer you wait to sell it, the more it will cost you. What you need is a stop-loss order.

Setting up a stop-loss order is easy, and it can be an investor’s best friend. You choose your selling price ahead of time, and should the stock dip to that level, your broker automatically sells it, limiting your losses.

You can also use stop-loss orders to lock in profits when a stock surges. Either way, it’s a great way to prevent you from getting carried away by your emotions. Contact your broker or discount broker for details.

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