A stop-loss is a useful tool if you’re trading stocks that have the potential to make big moves. Think meme stocks, penny stocks, biotechs, hot sector stocks, etc. If you’re not able to sit and watch charts and price action all day long, you need to know how to set a stop-loss to prevent your losses from exceeding your max risk.
On the Robinhood app, it’s easy to find where to execute simple buy and sell orders, but the stop orders are a little tougher to find. To set a stop-loss, you first need to decide whether you want to use a stop order or a stop-limit order. For details on the difference between these two order types, check out this post here. For this example, we are going to use a simple stop order.
The first step is to pull up the stock you want to set a stop loss for. Tap Trade and then Sell. This will take you to your sell window where you’ll need to edit your sell order details to create the stop loss. Tap Shares in the upper right corner to edit the order type.
This will bring you to a screen where you can choose your order type. Scroll down and you will see the Conditional Orders available in the Robinhood app. Tap Stop Order and you will be taken to a screen that gives you a little information on how a stop order works.
Once you hit Continue, you will be prompted to enter a stop price. This is the price that you want to sell at if the stocks drops to a certain point. Remember, you are cutting potential bigger losses with a stop loss, so think about your stop price carefully. You don’t want to enter a price the stock is very likely to hit before making a move up. Set stops slightly below key levels which would signal a bearish move.
In the example below, I am setting my stop price for BTBT at $9.40. This is purely an example and not a recommendation in any way. This means that if the stocks moves down to $9.40, a market order to sell will be triggered and theoretically I will avoid potentially larger losses.
Once you set your stop price, tap Continue. Now you will choose your Time In Force. This is imply how long you would like your stop loss order to last. Choosing 4:00pm Today will cancel the order if it doesn’t fill during the current trading day. Choosing the second options keeps the order active for 90 days (unless it fills before then of course). Select your Time In Force preference and tap Continue.
Finally, you will enter the number of shares you want your stop loss to apply to and tap Review. Then you will Swipe Up to submit the order.
You now have a stop loss set for your shares in Robinhood!
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