A stop-loss strategy is a risk management technique used in trading to limit potential losses. Here's a brief overview:
*What is a stop-loss?*
A stop-loss is an order to sell a security when it falls to a certain price, known as the stop price. This helps limit potential losses if the market moves against your position.
*Types of stop-loss strategies:*
1. *Fixed price stop-loss*: Sets a specific price at which to sell.
2. *Percentage-based stop-loss*: Sets a percentage decline from the entry price.
3. *Trailing stop-loss*: Adjusts the stop price as the market price moves in favor of the trade.
*Benefits:*
1. Limits potential losses
2. Helps manage risk
3. Can help traders stick to their trading plan