What is a Sell Stop?
A sell stop is a type of order used in trading, particularly in the stock market, to sell a security when it reaches a specified price level. This order is designed to help traders manage risk and exit a position at a predetermined price, thereby limiting potential losses. By setting a sell stop, investors can automate the process of selling a stock, which can be particularly useful in fast-moving markets where manual execution might be challenging. In this article, we will delve into the details of how a sell stop works, its benefits, and its potential drawbacks.
