Explanation:
Let us understand the term stop-loss order:
· This is an “order sited” with the “broker to buy or sell” once the stock reaches a certain amount or price.
· This is “designed to limit” an investor's loss on a security point.
· Fixing a stop-loss order for “20% below the price” the margin which you have bought the stock will “limit your loss to 20%”
Let us understand the term buy stop order:
It guides a “broker to purchase a security” when it reaches a strike price that is higher than the “current spot price”.
