Avaneesh Parasar Explains The Stop Loss Order
There are a lot of considerations that go into buying a stock. However, no matter how careful you are, you are bound to miss out on something or the other. Avaneesh Parasar says that one of those factors is the stop-loss order. It is important to know about this order because if you use it in an appropriate manner, it can make a world of a difference when trading in stocks. The benefits that you can get out of this is multifold. Did you know that one of the key advantages of using this is that you do not need to monitor your holdings on a daily basis? Here, in this blog, we tell you all about the stop-loss order and how you can reap the maximum profit out of using it correctly.
What is a Stop-Loss Order?
An order that is placed with a broker for the purposes of buying or selling a specific stock after the stock reaches a particular price is known as Stop-Loss order. It is designed in such a way so that it can limit an investor’s loss on the security position. Here, Avaneesh Parasar gives an example and says that if you set a stop-loss order for 10% below the price at which you bought the stock originally will limit your loss to only 10%.
Similar to stop-loss orders are stop-limit orders. Just like their name, there is a limit on the price at which they will be executed. In such an order, two prices are specified. One is the stop price that will convert the order into a selling order and the other is the limit price. Then, instead of becoming a market order for the purposes of selling, the selling order will become a limit order that can only be executed at the limit price.
What are the advantages of a Stop-Loss order?
According to Avaneesh Parasar, there are many benefits of implementing a Stop-Loss order. One of the key benefits of the same is that it does not cost anything to implement this order. A regular commission is charged only once when a stop-loss price has been reached and then the stock must be sold.
Another added benefit of the same that Avaneesh Parasar says is very lucrative is that it allows decision-making to be free or rid of any kind of emotional influences. A stop-loss order is a useful order to lock in all the profits. They are also referred to as a ‘trailing stop’. One of the reasons it is called so is because the price of the stop-loss adjusts when there is a fluctuation in the price of the stock price.
A stop-loss order is an extremely useful tool that most investors fail to use to their benefit. The reason Avaneesh Parasar mentions this order is that all investing styles can benefit from this tool — whether you want to prevent excessive losses or you want to lock in on the profits that you make. If you keep these ideas and concepts in mind, you are sure to make it big when you trade the next time!
