Sell stop意思
"Sell stop" is a trading order that tells your broker to sell a security at the market price once the price falls to or below a certain level, known as the stop price. This order is used by traders and investors to manage risk and limit potential losses.
Here's how a sell stop order works:
- You place a sell stop order for a security.
- The market price of the security begins to decline.
- When the price reaches or falls below the stop price, your sell stop order becomes active.
- Once the order is triggered, it is automatically executed at the best available market price.
The purpose of a sell stop order is to limit losses by ensuring that the security is sold before the price falls too far. It can also be used to lock in profits if the stop price is set below the current market price but above the price at which the investor originally bought the security.
It's important to note that sell stop orders do not guarantee execution at the stop price, as the market price may move quickly. Additionally, stop orders can be "trapped" by market movements, leading to unexpected losses if the price moves against the investor's position.
Sell stop orders are a common tool used in both short-term trading and long-term investing strategies to manage risk and protect capital.