#StopLossStrategies A stop-loss strategy is a risk management technique used by traders and investors to limit potential losses in a position by setting a predetermined price level at which the asset will automatically be sold (for a long position) or bought (for a short position). This strategy helps to protect against significant losses when the market moves unfavorably.

Here are a few types of stop-loss strategies:

1. Fixed Stop-Loss

How it works: You set a specific price level below (for long positions) or above (for short positions) your entry point. Once the asset hits that price, the position is closed automatically.

Example: If you buy a stock at $50, you might set a stop-loss at $45. If the stock price drops to $45, your position will be sold to limit the loss.

2. Trailing Stop-Loss

How it works: This stop-loss moves with the market price. It’s set at a fixed percentage or amount below (for long positions) or above (for short positions) the highest price the asset has reached since the trade was initiated.

Example: You buy a stock at $50, and set a trailing stop at 5%. If the stock rises to $60, the stop-loss would automatically adjust to $57. If the stock price then falls to $57, your position will be sold.

3. Percentage Stop-Loss

How it works: This strategy sets the stop-loss at a specific percentage below or above the entry price. The percentage is predetermined based on your risk tolerance.

Example: If you are willing to risk a 10% loss on a $100 stock purchase, you would set the stop-loss at $90.