An excellent way for Robinhood investors to minimize risk is to know how to set a stop loss on Robinhood. There’s always a close relationship between the words “stocks” and “risk”. That’s because there’s a high probability of having your funds drained when the stock market is in charge. However, there are a handful of ways for Robinhood users to reduce these hazards.
Go to the stock’s page on Robinhood. Tap the “…” button next to the stock’s price. Tap “Edit Order.” Enter your stop loss price in the “Stop” field. Check if the “Order Type” is adjusted to “Stop Limit.” Tap “Preview Order” and then on “Place Order” to proceed with setting up.
This can help you to limit your losses and protect your investment. Read on to know more about a stop loss, what you should know about setting a stop loss, and the benefits associated with it.
Reasons On Why You Want To Set A Stop Loss On Robinhood
There are a few different reasons why you might want to set a stop loss on Robinhood:
Limit Your Losses
If the stock price falls below your stop loss price, your shares will be sold, and you’ll realize a loss. However, this loss will be limited to the difference between the stop loss price and the actual selling price.
Take Emotion Out Of Decision-Making
It can be challenging to sell a stock when it’s falling in value. You might hold on to the hope that it will rebound, only to see it fall further.
Stop losses can take the emotion out of decision-making by automatically selling your shares when the stock price falls below a certain level. In this way, you will get free from making any challenging decisions of whether to sell or not.
What You Should Know About Setting A Stop Loss On Robinhood
Before you set a stop loss on Robinhood, let’s rollover to the crucial points:
Your Stop Loss May Not Be Executed At Your Desired Price
If the stock price falls quickly, it may not fall to your stop loss price before getting bought up again. This means that your shares may be sold for less than you wanted.
You May Pay A Higher Commission If Your Stop Loss Is Triggered
Some brokers charge a higher commission if your stop loss is triggered. This is because they have to sell your shares quickly, which can be more expensive.
How To Set A Stop Loss On Robinhood
Here’s a series of steps leading to a stop loss activation.
- Sign in to your Robinhood account and select the stock you want to buy
- Head over to the 3-horizontal icon accessible at the top-right corner of your screen.
- A menu will appear. From the list, choose “Stop Loss”.
- Enter the stop loss price you want
- Tap on “Place Order”
Applying these strategies and remembering these critical points would leave you risk-free with considerable investments. Always keen on doing proper research for yourself before falling into a deep trap.