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Stop-Loss Order

A stop-loss order is a type of order that traders use to cap their losses or lock in a profit on an existing position. By using stop-loss orders, traders can limit the amount of risk they are exposed to. Stop-loss orders are instructions to exit a trade by purchasing or selling a security at market value when it hits the stop price. Bear in mind that stop-loss orders only get triggered during regular market hours. If price drops below a certain level during extended market hours (premarket or post market) the stop will not get triggered. In other words, stop loss orders do not remove the risks associated with holding positions overnight.

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