How to Do a Stock Loss Order

• 1). Find a stock you own which is currently in profit.
  
  
• 2). Determine how much of that profit you are willing to give up should the stock suddenly begin trading down and how much of that profit you wish to protect.
  
  
• 3). Contact your broker and instruct him or her to place a stop loss order at the point where you have determined your minimum profit is. In other words, tell your broker that you want your stock sold automatically if the price drops to your pre-determined minimum profit level.
  
  
• 4). Protect your profit even further by placing what is called a Trailing Stop on your stock. This is a stop loss that follows your stock as it continues trading higher so that you protect a greater profit each time your stock trades higher. A trailing stop that is set 5 points below the current price of your stock will continue following your stock as it trades higher, but should your stock trade lower by 5 points at any time, your stock will automatically be sold, protecting your profit.
  
  
• 5). Monitor the progress of your stock and adjust the position of your stop loss order as market conditions dictate. For additional detailed information on stop loss orders please see the Additional Resources link below.