We will explain in detail the easy steps on how to set a stop loss on Robinhood, why you should set stop loss, and what stop-loss order is all about.
As a trader or an investor, and you wish to limit your trade losses, you need an exit plan to limit the risk on your trade.
And when a trade goes against you, a stop-loss order is an essential part of that plan that can be used to limit losses.
A stop-loss is an offsetting order that exits a trade once a specific price level is reached. With so many factors to consider when deciding whether or not to buy a stock, the stop-loss order should be one of those factors.
What is a Stop-Loss Order?
Investors or traders use a stop-loss order to limit losses. An investor uses the stop-loss order to exit a trading position he holds if the price moves to a certain level that represents a certain amount of loss in the trade position.
Robinhood Limits Price Options
- Buy Limit Order: Setting a limit price, the maximum price one wishes to pay for a contract. The contract will only be purchased at their set limit price or lower.
- Sell Limit Order: setting a limit price, which is the minimum amount one would want to receive for a contract. The contract will only be sold at your set limit price or higher.
Why Set Stop-Loss Order
We gave detailed steps on setting a stop loss on Robinhood earlier in this post; now, we will be stating why you should set up a stop-loss order in your trade.
You are advised to set a stop-loss order in a trade to limit the risk and avoid a potentially catastrophic loss in a trade position.
A stop-loss order makes trading less risky by reducing the capital risked on any single trade.
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How to Set a Stop Loss on Robinhood
Here is a detailed step on how to set a stop loss on Robinhood:
- Launch the Robinhood app on your device
- Open up the app, then scroll down from the Home page & you will see all your stocks list.
- Tap on the stock you would want to set up the stop loss.
- Tap on the Trade button at the bottom right corner.
- Next, click the sell option.
- Next, click the Dollars option at the top right corner.
- As you tap on the Dollars option of the app, it will open up a couple of different options. So, in the “Conditional Orders” section, you will have to tap on the “Stop Order.”
- Next, you will see a page explaining “How the Stop order works .” (As you set a fixed stop price below the current price of the trade stock. A market sell is triggered when that trade stock falls to the stop price or lower.) tap on the Continue button at the bottom.
- Next, enter your stop Price (Which should be lower/less than the Market price of that stock) & tap on the Continue.
- Next step, you will have to Set Time in Force. You have two options here; first, you can set for “One trading day” and 90 days for the second option). select the second one if you are holding for a few days.
- Next, enter the number of shares you want to set the stop order & hit the Review button.
- Next, it will show you all the details of your order. If all looks good, then swipe up to submit your stop-loss order.
By following the steps outlined above on setting a stop loss on Robinhood, you won’t find it difficult to set up a stop loss on Robinhood.
Understanding Robinhood Stop Loss And Limit Sell
Stop-loss orders are instructions that a trader or investor gives to their broker. The Stop orders convert to market orders, which are implemented at the next available price when the stock price crosses the stop price.
While a sell limit order is a conditional instruction set by a trader, which is the minimum amount they would want to receive for a contract, the contract will only be sold out at their limit price or even higher.
When a stop-loss order tool is used appropriately, it can make a world of difference and also benefit you as a trader or investor.
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Watch the video below to learn how to set a Stop Loss on Robinhood:
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