Guides · Easy money, trading and scams: the truth
Is a stop-loss really useful?
In short: A stop-loss sells automatically if the price drops below a level, to limit a loss. It is useful for trading, less so for long-term investing, and it must account for the asset's normal volatility.
Placing it sensibly
Too close, and it triggers on a normal move. On a stock that usually moves ±8% a month, a -3% stop will be hit very often. The radar's expected volatility helps pick a reasonable distance.
Its limits
In a sudden gap down at the open it can execute well below the level. And it can make you sell just before a rebound.
For the long term
With a diversified ETF, many investors prefer no stop and manage risk through position size.