THINK ABOUT PROFIT AND LOSS BEFORE USING STOP LOSS ORDER


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Investment in share market is always a risky game. But some technical privileges are available for investors that he would lessen these risks. Stop loss order is one of them, which minimizes the risk of investment in share market. These days investors and traders are frequently using stop loss order. But, every good technique has its own limitations. So, one has to be cautious during selection of stop loss order.

‘Stop loss order’ is a process in which investors fix a limit at the time of investment. If price of share goes down below the limit, stock market sells his shares. Normally stop loss order is automated. In this, price of shares are fixed initially.

If stop loss order is used with skills and intelligently it is very profitable. But, if stop loss order is used without thinking it can give loss to investors. For instance, before some days, the share market of America fell down by only 3%, and recovered on the same day, but it gave more loss than year 2008 and 2009. This day was the worst day for American share market during 1987 to 2007. Everybody was astonished about it. But this was the impact of stop loss order. This fall in the share market of America was due to order of selling on the agreement of both sides. This stop loss order was performed at one time on many computers. That day shares of P&G fell down by 30%.

So, one have to use the option of stop loss order after thinking and understanding very wisely.





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