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This is sometimes called a stop/loss order.
You own 100 shares of a stock that is currently trading for $10.00 per share, and the price has been falling or you think it may fall.
You may set a stop to limit your loss in case it drops.
--or--
You may have considerable profit showing on this stock and you want to conserve a certain amount of that profit, yet allow the stock to fluctuate a bit.
You want to sell the stock automatically if the price hits $ 9.85
“Day” means the order is only good for today.
“GTC” means the order will be Good Till Canceled (in could execute 3 weeks from now or more).
Enter the Symbol, Quantity, Type (Stop), and enter 9.85 in the Stop field. Click "Sell" and confirm the order.
Enter the Symbol, Quantity, Type (Stop), and enter 9.85 in the Stop field. Click "Sell" and confirm the order.
click to enlarge
The stock will be sold when the price drops to $9.85
You will no longer own it if it hits $9.85 even if it dips and then rises again. Let's hope you picked the point at which the upside potential has been exhausted.
Note: Some trading platforms execute Sell Stop / Stop-loss orders based on the "Last Traded Price" and other platforms use the stock's "Bid" price when executing this type of order. Check with your broker to find out which execution method applies.
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