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 ?
"Traders may go long in Sabic from current levels of 114.50 riyals for a target of 126 riyals in the short-term, but must have a protective stop loss placed under 112 riyals," Prakash said.
Maintaining production becomes more challenging when the pHRI is continuous [8] since the robot has to operate at a greatly reduced speed to ensure it can initiate a protective stop quick enough to minimize the impact force if contact is made.
Current collaborative applications detect a collision as it occurs and react by initiating a protective stop. The robot's forces and speeds are limited when the potential for collision is high so harm during a collision is minimized.
There are two types of stops, emergency stop and protective stop, and each one is active for different reasons [6,14].
Any detected failure in the safety-related parts of the control triggers a protective stop. With industrial robots the protective stop is initiated by safeguarding devices.
Long positions if created must have a protective stop loss placed below its previous low at Dh5.48," Shiv Prakash, senior analyst with First Abu Dhabi Bank Securities (FABS), said.
<strong>What if the market reverses just before hitting my target?</strong><br> Make a protective stop to break-even when/if the market moves halfway to your target.
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.
Traders opting to buy on dips must place a protective stop loss just below the support level of Dh7.80," said Shiv Prakash, senior analyst with National Bank of Abu Dhabi Securities (NBADS) in a note.
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.
Protective stops could be placed below support with targets to take profit set as twice that risk for our 1:2 risk:reward ratio.

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