If you stock alerts have told you that the price of your stock has dropped and you missed it only to find that the price dropped even further, you will have a pretty serious loss on your hands. This is why you should take steps and measures to prevent such losses from occurring. There is one measure that you can take that will beat all the rest in terms of mitigating your losses, and this measure is generally referred to as a stop loss order.
The name of this risk minimizing measure is pretty self explanatory. It will make it seem like you have more in common with the market than you would like to let on, but over time you will find that it’s worth it. The main premise of this order is that it will make it so that if the value of a stock drops past a certain point, you will be able to have it sold off immediately and automatically. For example, if you have set five percent as the limit, if the value of the stock drops by five percent the system will end up dumping all of it.
This is a good way for you to minimize any losses that might have been incurred by the stock price having dropped even more, although it’s fair to say that you would miss out on the chance to profit if the price rises after falling which is something that frequently tends to happen. It all depends on the kind of trader you are at the end of the day. If you are someone that plays it safe, having a stop loss order can help you to do so quite efficiently, and after all no one likes stress so it’s worth it.