#StopLossStrategies

If you purchase a stock at a certain amount of money, say $20, and you want to make sure you don't lose more than 5 percent of your investment, you'll want to set your stop-loss order at $19. If the stock falls to $19 or below, it is automatically sold at the best market price at the moment.

According to Stock Trader, there are many reasons a person would want to set a stop-loss order. Doing so allows the trader to focus on other matters in his or her life, even during times of market volatility. This is because stop-losses don't need the investor to be present; they are completely automated.

Investors also like this technique because it removes all emotion and the possibility of over-thinking a sell. Investing can become an emotional trigger for some, resulting in poor practice and, eventually, loss. Creating a stop-loss is purely logical, which is important in an industry that requires discipline to succeed.