Stop loss is an amazing order type that helps you to safeguard yourself against potential losses from trade. It lets the buyer buy or sell a stock automatically, once a particular set price is achieved. It is a way to limit the trader’s losses. For instance, if you have applied a stop loss at about 15% below the buying price, then your loss is limited to 15%. you cannot incur a loss more than 15%.
Setting up a stop loss while trading has both advantages and disadvantages.
• you don't have to keep a constant watch on your stock’s position.
• You are safeguarded against big losses by setting a stop loss.
• this type of order cannot be placed on all types of securities.
• If the stop loss is set at a price too close to the current price, the deal may get triggered and an unnecessary sale may take place.