losses or protect profits. Essentially, it’s an order placed with a broker to sell a security when it reaches a certain price. Once the security hits the designated stop-loss price, the order becomes a market order, meaning it will be sold at the best available price.
Here’s a simple example: Let’s say you buy a stock at $50 per share. You could set a stop-loss order at $45. If the stock price drops to $45 or below, your stop-loss order would trigger, and the stock would be sold, limiting your loss.
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