What is a stop order?
Investing in stocks can be a risky proposition as many stocks can experience price volatility. The changes in the stock market can result in investors making overly cautious or emotional decisions that can hurt their investments.
Answer and Explanation: 1
A stop order is a request by an investor to their broker to buy or sell a stock when it hits a certain price.
Stop orders prevent investors from buying a stock when it is overvalued and prevent significant losses if it falls below a certain point. Stop orders are important limits and risk prevention steps to take in investing to ensure that risky investments do not seriously harm the investor's portfolio.
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fromChapter 25 / Lesson 16
Investors often turn to the stock and bond markets when investing their money. Each market offers opportunities and risks for the individual investor. In this lesson, we'll explore the nature of these investments.