Arianna just made another fantastic investment: She purchased 400 shares in Great Gains Corporation for $20.0920.09 per share. Yesterday the stock closed at $54.1254.12 per share. In order to lock in her gains, she has decided to employ a stop-loss order. Assuming she set the order at $53.7353.73 , what is likely to happen? Why might this not be a wise decision? At what price would you recommend setting the stop-loss order? Why?

Question

Landin Bean

Business

20 May, 12:14

Arianna just made another fantastic investment: She purchased 400 shares in Great Gains Corporation for $20.0920.09 per share. Yesterday the stock closed at $54.1254.12 per share. In order to lock in her gains, she has decided to employ a stop-loss order. Assuming she set the order at $53.7353.73 , what is likely to happen? Why might this not be a wise decision? At what price would you recommend setting the stop-loss order? Why?

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Dulce Gibbs · Answer 1

1. Likely the price of the stock either goes up or falls

2. There is no need for a stop loss order in this scenario.

3. 5412541.2

Explanation:

1. Stock market prices are often unstable, prices can be up today, the next day they are low.

2. Arianna has already made over 100% profit from the stock since she purchased at a good low price, yesterday's stock close price was still profit for her.

3. A 10% Stop loss price would have been the idea order price rather than the $53.7353.73 .

4. Remember Stop loss order are meant to reduce or minimize the loss of investor or trader, a calculated level of should be carefully decided.