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Beginning Investors Forum > Stop loss?

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NickJames

Member since: Aug 09
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Age: 20's
California
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Posted October 14, 2009 (06:47PM)

A begginners question here. How do I make an order to sell a certain stock if the price drops? For example: I have shares of KSU and if the price falls say $00.50 I want to sell x-amount of shares. But if the price goes up/stays the same/doesnt fall .50. I want to hold onto the shares.

Thanks.
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StefanMcVeigh

Member since: Jun 07
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Electronic Customer Support at TradeKing
Age: 20's
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StefanMcVeigh TradeKing Staff Member
Posted October 14, 2009 (09:15PM)
NickJames,

You are correct that the type of order you are describing is a sell stop. Below I have provided an example of how a sell stop would work.

Example Sell Stop: You currently own stock XYZ that trades at $10.00 per share. To protect yourself on the downside you place a Sell Stop order at $9.00. If the bid or last trade of the security hits your stop price of $9.00, the order will then sell your shares at the market. Please note that if stock XYZ closes one day at $9.50 and opens the next morning at $7.00 per share and you have an open Stop order to sell at $9.00 'Stop' then the Stop price will have been met and your order will be filled at the best available market price at the open.

Best regards,

Stefan McVeigh
TradeKing Customer Support