Personal Finance & Money Asked on September 2, 2021
When you buy stock and are able to set a stop loss of up to 95% of your initial investment. This would mean if I buy stock for $100, which then skyrockets to $1000 but then drops to $100, no stop loss is triggered, despite a 90% drop in investment value.
Is there a way to set a stop loss as a percentage of the value of the stock at the current point in time, rather than the initial investment only? i.e. automatically sell if the stock drops more than 15% of the highest point?
And if it’s possible, is it wise?
If your broker offers it, you can place a Sell trailing stop order. It sets the stop price at a fixed amount below the market price with an attached "trailing" amount. As the market price rises, the stop price rises by the trail amount, but if the stock price falls, the stop loss price doesn't change, and a market order is submitted when the stop price is hit. This technique is designed to allow an investor to specify a limit on the maximum possible loss, without setting a limit on the maximum possible gain. "Buy" trailing stop orders are the mirror image of sell trailing stop orders, and are most appropriate for use in falling markets.
You can also set a Trailing Stop Limit Order.
Answered by Bob Baerker on September 2, 2021
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