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by davidw 5787 days ago
Actually I don't know much at all about investing. I know what a stop loss order is, but I don't think I'd know how to use one effectively.
2 comments

You probably won't need it, unless you're doing something significantly more complex than the fundamental buy-and-hold index investing strategy.

I'd just use market orders all the time except I'm a little freaked out about momentary (on the order of minutes) market freak-outs as happened a couple months ago. Limit orders priced at the current price (or 1 cent higher) is pretty much just my way of enforcing a sane market order.

Stop limit orders are a good way to determine when to sell, which is the toughest decision to make. Even if you are dollar cost averaging into a position, you can set a limit order to protect profits, or prevent a large loss. I've seen some recommendations to put a stop limit order of a certain percentage on any new position for stocks/ETFs as a way to keep emotion out of your decision. A trailing stop limit order allows you to sell only when a stock/ETF goes down.