Could stop loss sell at a lower price?
|Investment | Shares
Asked by winger14, submitted
09 August 2012.
if there was a crash in the stock market, is it possible that the sale of my shares triggered by stop loss limits that I have set as a safeguard, could be delayed by the amount of people trying to sell at the same time and the shares could end up being sold at a much lower price?
Answered by Justin on 03 September 2012
Yes. A stop loss means the broker will sell your shares if they hit a 'trigger' price that you've specified. However, if the price is falling more quickly than the stockbroker can deal your shares may end up selling below the trigger price, i.e. there's no guarantee of the price you'll get.
The alternative is to use a limit order, which means the broker will only sell if they can get your specified price. However, this risks the shares not being sold at all if the broker is unable to sell at the trigger price - possible in a fast falling market.
Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific
investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if
necessary, use a qualified professional adviser.
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