protective stop

Protective Stop

An investment strategy designed to limit losses on a security by means of setting up a stop-loss order or stop-limit order. For example, a protective stop may involve an investor giving an order to his/her broker to sell a stock if its price drops more than 5% below what the investor paid. So, if the investor paid $30 per share, the protective stop would mean selling automatically if the price reached $28.50. Protective stops are risk averse and assume that if the price reaches (in this case) $28.50, it will continue its downward trend.

protective stop

A stop order that protects gains or limits losses of an existing investment position.
References in periodicals archive ?
Money Management Planner: Users can develop multi-level money management strategies with customized combinations of profit and protective stop orders, including break-even and trailing stops.
lt;/strong><br> Make a protective stop to break-even when/if the market moves halfway to your target.
Use a protective stop and have it in the market whenever you are in a trade<br> 3.
However, the higher the number of short orders in a bull market the more dangerous is to take additional shorts because many of those traders who just entered the markets are also leaving their protective stop losses just above the current price action.
The Market Radar continues to track its' recommendations and follow them up with protective stop levels and sells.
Those stop/reverse lines are the exact prices where many professional traders place their protective stops to lock in gains and to exit a trade at a trend change.
Also, AlgoTrades adjusts protective stops and profit targets, uses advanced filters to monitor the market on a tick-by-tick basis carefully evaluating each entry, profit or loss, and stop placement level in real time.
Protective stops should be placed above a resistance level and I have the first level noted on this chart.
All Recommendations include Specific Entry and Exit Price Points with Realistic Protective Stops
Using the Elliott wave principal to find high-probability price targets and practice protective stops
Protective stops could be placed below support with targets to take profit set as twice that risk for our 1:2 risk:reward ratio.