This week we talked about different order types and how traders can use them to maintain a level of control over their trades even when they can’t watch the markets. They can assess their downside risk tolerance ahead of time and set their stops orders accordingly. But we didn’t really cover one of the most important – and perhaps most frequently issued – types of orders.
Stop orders.
A stop order is an order to sell a security at a given price. Some traders use dollar-based stops, others use percentage-based stops (not to mention the all-important trailing stop, which adjusts to lock in profits as your trade moves up or down).
But here’s the secret not a lot of traders know…
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