Why are stop orders important in trading?
Stop orders are a great way to help manage risk and make smarter trading decisions. A sell-stop order can protect you by automatically selling your stock if the price drops, which is especially useful during shaky market conditions when prices fall quickly. This means you don't have to watch the market constantly. If your stock hits the set price, it's sold, limiting your losses.
On the flip side, a buy-stop order allows you to get in on a stock once it starts rising. If you're waiting for a stock to break through a certain price level to confirm it's on an upward trend, a buy-stop order will automatically purchase the stock for you at that point. This way, you're making decisions based on clear price points, not on emotions, guesswork, or attempts at trading after a night out.