The optimal percentage for setting a stop-loss limit depends on individual risk tolerance, investment goals, and market conditions. However, a common approach is to set the stop-loss at a percentage loss threshold, such as 5% to 10% below the original purchase price12. This allows for a cushion against normal market fluctuations while limiting potential losses in the event of a significant downturn.
For example, if you bought a stock at $50 per share and are willing to risk a 5% loss, you might set your stop-loss at $47.50. If you prefer a more conservative approach, you might set the stop-loss at 10%, which would be $45 per share.
It's important to note that the specific percentage chosen should align with your overall investment strategy and risk tolerance. Additionally, consider the liquidity of the stock and the potential impact on the stock price if the stop-loss is triggered34.
In any case, it's crucial to periodically review and adjust stop-loss limits as market conditions change and as your investment strategy evolves.
10/12/2024 08:09pm
