If you’re a trader or investor and you wish to limit your losses, you might use a plethora of orders to enter and exit the stock market automatically. For this, you can use stop-loss and limit order strategies. However, it’s vital to know the distinctions between these numerous options and how to set them up correctly.
And even when it comes just to stop-loss, there are two types of orders. Luckily, in this article, you can find all the necessary guidelines for setting up a stop-loss order efficiently.
How to Set a Stop-Loss Order in Robinhood on a PC
Stop-limit orders give you additional control over the execution of your transaction by adding a trigger. A limit order is triggered whenever the options contract reaches the stop price you designate. The limited order will be implemented if contracts are offered at or better than the price you specify in your limit order. In the event of a loss or a profit, investors might employ stop-limit orders.
There are no commissions or per-contract costs when you trade options on Robinhood. However, other platforms might charge you.
So, how can you set up that limit to trigger the stop-loss Function? Here’s how you can do it using a PC:
- Log into your Robinhood account.
- Click on the three horizontal dots on the top right corner.
- Navigate to the option order screen.
- Click on “Stop Price.”
- Insert the desired amount.
- Select “Continue” and choose between the one-day or 90 days time options. If you want to have the stop-loss option set for a couple of days, it’s best to go with the 90 days option.
- Enter the number of shares you want this setting to apply to.
- Click “Review” to check your settings.
How to Set a Stop-Loss Order in Robinhood on an iPhone
For users that like to do their trading and investing on the go, there is a convenient Robinhood app for both iOS and Android. Here’s how you can set up a stop-loss order using the iPhone app:
- Launch the Robinhood app on your iPhone.
- Scroll down to the bottom of the page, and you’ll see a list of all of your stocks.
- From the list, choose the stock for which you would like to set a stop-loss.
- The stock’s past performance and other relevant data may be found here. Tap on the “Trade” button, which may be found at the bottom right.
- Select the “Sell” option.
- At the top right of the page, select “Dollars.”
- The “Dollars” option will bring up a few additional choices when you tap on it. So, in the “Conditional Orders” section, tap on the “Stop Order.”
- Tap the Continue button to proceed.
- Enter your stop price (which should be lower than that stock’s market price) and then press “Continue.” You may choose “One trading day” as the time period. The second option is to have the set stop-loss on for 90 days. So, if you’re holding for a few days, go with option two.
- Enter the number of shares for which you wish to set this stop order and select the “Review” option.
The following page will show you the complete specifics of your order. Stop-loss orders can be sent by swiping up.
How to Set a Stop-Loss Order in Robinhood on an Android Device
For the Android users out there, the Robinhood app also allows you to set stop-loss orders. Here’s how:
- Open the Robinhood application.
- There will be a list of all your stocks at the bottom of the page.
- Select the stock for which you want to establish a stop-loss from the list.
- The stock’s historical information and other important data may be found here. Tap on the “Trade” button that is located at the bottom-right of the screen.
- Choose “Sell” from the drop-down menu that appears.
- Select “Dollars.”
- Tap on “Stop Order” in the “Conditional Orders” section.
- Press “Continue.”
- Enter your stop price (which should be lower than the stock’s market price) and tap on “Continue.” One trading day is a one-time option. Setting a stop-loss for 90 days is the second option. Consider option two if you plan to have this stop-loss set for a few days.
- Select the “Review” option after entering the number of shares for which you intend to place this stop order.
Your order’s details will be displayed on the next page. Swiping up can be used to send stop-loss orders.
Additional FAQs
Is it possible to establish a Robinhood stop-loss after business hours?
The extended-hours session will not allow stop orders to be executed. Orders placed during extended hours will be queued for the next trading day’s market open.
Is it possible to put a stop-loss in place after you’ve made a purchase?
Yes. Using a stop-loss order to restrict your loss to, say, 10% of the price at which you purchased the stock is an example of this. You can immediately place a stop-loss order of $17, for instance, after purchasing the stock. Your shares will be sold at the current market price when the stock falls below $18.
When setting stop-loss levels, how do I know what level to place them at?
When setting stop-loss levels, technical analysis may be quite helpful. In the case of a long position, for example, determining the stock’s critical support levels might be necessary for assessing the stock’s downside risk. To put it another way, it’s possible that the stock will suffer further losses if a significant support level is broken. However, be on the lookout for false outbreaks prior to entering stop-loss levels into your trading platform, conduct thorough research utilizing technical analysis and other tools.
Can I use stop-loss orders to safeguard long and short positions?
Definitely, in this context, the name “stop-loss order” is a little bit misleading. Stop-loss orders are mainly intended to guard against significant losses on both long and short positions. However, since they get triggered when the security’s price trades over a specified level, they can be utilized against large gains on current holdings as well. Even so, because stop-loss and stop-loss orders are transformed to market orders after they are broken, their actual price execution may be considerably below or above the stop-loss price.
Gain Greater Control Over Your Stocks
To provide investors and traders with more control, stop-loss orders allow them to set a price restriction for each transaction. Once a stock’s price reaches the stop price, a limit order is activated, which instructs the market maker to buy or sell it at the limit price. The option limits losses by setting the point at which the investor is unable to tolerate losses.
Although stop-loss orders can help minimize your losses, neither of these strategies is infallible. A stop-loss order may be performed at a price considerably different than the stop-loss price once the stop-loss threshold has been broken. Make sure you do your own research and understand the benefits and downsides of this type of order before placing it.
Have you ever set a stop-loss order before? Have you ever traded stocks on Robinhood? What do you like about this platform? Let us know in the comment section below!
FAQs
To place a stop limit order, tap the gear icon in the upper right corner on the options order screen (select “⋯” on Web), and add a “Stop Price.” Learn more about stop limit orders and other order types.
How do you set up a stop-loss? ›
Once you have inserted the moving average, all you have to do is set your stop loss just below the level of the moving average. For instance, if you own a stock that is currently trading at $50 and the moving average is at $46, you should set your stop loss just below $46.
Can you set a stop-loss on Robinhood after hours? ›
Stop orders won't execute during extended hours. The stop limit and stop loss orders you place during extended hours will queue for the opening of regular market hours on the next trading day. Trailing stop orders won't execute during extended hours.
Can you set a stop-loss and limit sell at the same time Robinhood? ›
Yes, you can set a stop loss and limit sell at the same time at different prices. The limit order price is higher than the current price while stop loss is below the current price.
What is the difference between stop-loss and stop limit on Robinhood? ›
A buy-stop order is a type of stop-loss order that protects short positions; it is set above the current market price and is triggered if the price rises above that level. Stop-limit orders are a type of stop-loss, but at the stop price, the order becomes a limit order—only executing at the limit price or better.
Can Robinhood do stop orders? ›
To protect your account against overspending, we'll over-reserve your buying power for stop buy orders and trailing stop buy orders. For Good-For-Day orders that you enter during market hours, we'll reserve an additional 5% of buying power. For other orders, we'll reserve an additional 10% of buying power.
Can I add stop-loss after buying? ›
Right after buying the stock you enter a stop-loss order for Rs 800. If the stock falls below this level (Rs 800), your shares will then be sold at the prevailing market price.
Is there a fee for stop-loss? ›
The most important benefit of a stop-loss order is that it costs nothing to implement. Your regular commission is charged only once the stop-loss price has been reached and the stock must be sold.
Where do I place my stop-loss order? ›
If you're intending to go long, the stop-loss should be placed below the market price, or it should be placed above the market price if going short.
Do stop losses trigger after hours? ›
Stop orders will only trigger during the standard market session, 9:30 a.m. to 4 p.m. ET. Stop orders will not execute during extended-hours sessions, such as pre-market or after-hours sessions, or take effect when the stock is not trading (e.g., during stock halts or on weekends or market holidays).
Most traders use take-profit orders in conjunction with stop-loss orders (S/L) to manage their open positions. If the security rises to the take-profit point, the T/P order is executed and the position is closed for a gain.
What is the difference between a stop limit and a stop-loss? ›
Stop-loss and stop-limit orders can provide different types of protection for both long and short investors. Stop-loss orders guarantee execution, while stop-limit orders guarantee the price.
What is the difference between a stop-loss and limit order? ›
Remember that the key difference between a limit order and a stop order is that the limit order will only be filled at the specified limit price or better; whereas, once a stop order triggers at the specified price, it will be filled at the prevailing price in the market--which means that it could be executed at a ...
Can stop-loss be higher than buying price? ›
Remember, stop losses are applicable irrespective of whether you are in a long trade or in a short trade. If you are long on a stock then your stop loss will be below your initiation price and if you are short on a stock then your stop loss will be above your initiation price.
When should I use a stop-loss? ›
A stop-loss order is basically a tool used for short-term investment planning. It is used when the investor doesn't want the pressure of monitoring a security on a day-to-day basis. The trade gets triggered automatically and the limits are decided in advance. This can be very helpful for small investors.
Which is better stop-loss or take profit? ›
When comparing Take Profit vs Stop Loss, Stop Loss is more important. You can change orders once in trade, but it's recommended to avoid changing Stop Loss order once set, as traders get influenced by the power of open position once they are in an active trade.
Should I use a stop-loss on my investments? ›
Long term investors use trailing stop losses quite effectively. To conclude, the concept of stop loss is intended to limit your downside risk, protect your capital and instil trading discipline in you.
How does stop-loss work with examples? ›
A stop-loss order is a buy/sell order placed to limit the losses when you fear that the prices may move against your trade. For instance, if you have bought a stock at Rs 100 and you want to limit the loss at 95, you can place an order in the system to sell the stock as soon as the stock comes to 95.
What is the difference between a stop order and a stop limit order? ›
Remember that the key difference between a limit order and a stop order is that the limit order will only be filled at the specified limit price or better; whereas, once a stop order triggers at the specified price, it will be filled at the prevailing price in the market--which means that it could be executed at a ...
Can I set a limit order and a stop order? ›
Not only is it possible to enter the market on a limit and place a protective stop at the same time, but it is encouraged to help protect large losses and manage risk.
Stop-loss and stop-limit orders can provide different types of protection for both long and short investors. Stop-loss orders guarantee execution, while stop-limit orders guarantee the price. U.S. Securities and Exchange Commission.
Why would you want a stop order? ›
Stop orders can be used to limit losses. They can also be used to guarantee profits, by ensuring that a stock is sold before it falls below purchasing price. Stop-limit orders allow the investor to control the price at which an order is executed. The stop price and the limit price do not have to be the same.
Why would you buy a stop order? ›
A buy stop order is most commonly thought of as a tool to protect against the potentially unlimited losses of an uncovered short position. An investor is willing to open that short position to place a bet that the security will decline in price.
What is a stop-loss order Robinhood? ›
Stop-loss orders are conditional instructions that a trader gives to their broker. Stop orders convert to market orders, which execute at the next available price, as soon as the stock price crosses the stop price. A stop can be placed at any price and can be attached to instructions to buy or sell the stock.
What is an example of a stop-loss order? ›
A stop-loss order is a buy/sell order placed to limit the losses when you fear that the prices may move against your trade. For instance, if you have bought a stock at Rs 100 and you want to limit the loss at 95, you can place an order in the system to sell the stock as soon as the stock comes to 95.
What is a stop limit order example? ›
For example, if the current price per share is $60, the trader can set a stop price at $55 and a limit order at $53. The order is activated when the price falls to $55, but not below $53. Below $53, the order will not be fulfilled.
What happens if I set a sell limit? ›
For sell limit orders, you're setting a price floor—the lowest amount you'd be willing to accept for each share you sell. This means that your order may only be filled at your designated price or better. However, you're also directing your order to fill only if this condition occurs.
Can I set minimum sell price on Robinhood? ›
With a sell limit order, a stock is sold at your limit price or higher. Your limit price should be the minimum price you want to receive per share. MEOW is currently trading at $10 per share, but you want to receive at least $12 per share. You would set your limit price to $12.
Will Robinhood automatically sell options? ›
If you don't have enough buying power or underlying shares to exercise your option, we may attempt to sell the contract in the market for you within the last thirty minutes before the market closes on the options' expiration date.
