As an investor or trader, limiting your losses is crucial when dealing with the stock market. Fortunately, Robinhood offers a variety of orders, including stop-loss and limit orders, to help you achieve this goal. In this article, we’ll explain how to set up a stop-loss order on Robinhood on both PC and mobile devices.
What is a Stop-Loss Order?
A stop-loss order is a type of order that investors use to minimize their losses. It works by setting a price restriction for each transaction. When the stock’s price reaches the stop price, a limit order is triggered, instructing the market maker to sell it at the limit price. By setting a stop-loss order, you limit your losses by setting the point at which you are unable to tolerate losses.
Types of Stop-Loss Orders
There are two types of stop-loss orders: stop-market orders and stop-limit orders. A stop-market order is an order to sell the stock immediately when the price reaches the stop price. A stop-limit order, on the other hand, adds a trigger to give you more control over the execution of your transaction. It is triggered when the stock reaches the stop price you designate. The limit order is executed if the stock is offered at or better than the price you specify in your limit order.
Setting a Stop-Loss Order on Robinhood (PC)
Setting up a stop-loss order on Robinhood on your PC is easy. Here’s how:
- Log into your Robinhood account.
- Click on the three horizontal dots in the top right corner.
- Navigate to the option order screen.
- Click on “Stop Price.”
- Insert the desired amount.
- Select “Continue” and choose between the one-day or 90 days time options. If you want to have the stop-loss option set for a couple of days, it’s best to go with the 90 days option.
- Enter the number of shares you want this setting to apply to.
- Click “Review” to check your settings.
Setting a Stop-Loss Order on Robinhood (iPhone)
For those who prefer to trade and invest on the go, the Robinhood app is available for both iOS and Android devices. Here’s how you can set up a stop-loss order using the iPhone app:
- Launch the Robinhood app on your iPhone.
- Scroll down to the bottom of the page, and you’ll see a list of all your stocks.
- From the list, choose the stock for which you would like to set a stop-loss.
- Tap on the “Trade” button, which may be found at the bottom right.
- Select the “Sell” option.
- At the top right of the page, select “Dollars.”
- Tap on “Stop Order” in the “Conditional Orders” section.
- Press “Continue.”
- Enter your stop price (which should be lower than that stock’s market price) and then press “Continue.” You may choose “One trading day” as the time period. The second option is to have the set stop-loss on for 90 days. So, if you’re holding for a few days, go with option two.
- Enter the number of shares for which you wish to set this stop order and select the “Review” option.
- The following page will
- display the complete specifics of your order. You can send stop-loss orders by swiping up.
Setting a Stop-Loss Order on Robinhood (Android)
For Android users, the Robinhood app also allows you to set stop-loss orders. Here’s how:
- Open the Robinhood application.
- There will be a list of all your stocks at the bottom of the page.
- Select the stock for which you want to establish a stop-loss from the list.
- Tap on the “Trade” button that is located at the bottom-right of the screen.
- Choose “Sell” from the drop-down menu that appears.
- Select “Dollars.”
- Tap on “Stop Order” in the “Conditional Orders” section.
- Press “Continue.”
- Enter your stop price (which should be lower than the stock’s market price) and tap on “Continue.” One trading day is a one-time option. Setting a stop-loss for 90 days is the second option. Consider option two if you plan to have this stop-loss set for a few days.
- Select the “Review” option after entering the number of shares for which you intend to place this stop order.
- Your order details will be displayed on the next page. Swiping up can be used to send stop-loss orders.
FAQs | How to Set a Stop Loss on Robinhood?
Q1: Is it possible to establish a Robinhood stop-loss after business hours?
The extended-hours session will not allow stop orders to be executed. Orders placed during extended hours will be queued for the next trading day’s market opening.
Q2: Can I put a stop-loss in place after I’ve made a purchase?
Yes. Using a stop-loss order to restrict your loss too, say, 10% of the price at which you purchased the stock is an example of this. You can immediately place a stop-loss order of $17, for instance, after purchasing the stock. Your shares will be sold at the current market price when the stock falls below $18.
Q3: How do I know what level to place my stop-loss at?
Technical analysis can be quite helpful when setting stop-loss levels. For a long position, for example, determining the stock’s critical support levels might be necessary for assessing the stock’s downside risk. To put it another way, the stock may suffer further losses if a significant support level is broken.
However, be on the lookout for false outbreaks prior to entering stop-loss levels into your trading platform, and conduct thorough research utilizing technical analysis and other tools.
Q4: Can stop-loss orders safeguard both long and short positions?
Yes, stop-loss orders are mainly intended to guard against significant losses on both long and short positions. They get triggered when the security’s price trades over a specified level. Therefore, they can be utilized against large gains on current holdings as well.
Even so, because stop-loss and stop-loss orders are transformed into market orders after they are broken, their actual price execution may be considerably below or above the stop-loss price.
Q5: How effective are stop-loss orders in limiting losses?
Although stop-loss orders can help minimize your losses, neither of these strategies is infallible. A stop-loss order may be performed at a price considerably different than the stop-loss price once the stop-loss threshold has been broken.
Make sure you do your research and understand the benefits and downsides of this type of order before placing it.
In conclusion, setting a stop-loss order on Robinhood is a valuable tool for traders and investors looking to limit their losses. By following the steps outlined above, you can set up a stop-loss order on Robinhood on both PC and mobile devices.
Remember to conduct thorough research and understand the benefits and downsides of this type of order before placing it.
