Stops Building
Stops building is a financial term used to describe a strategy used by investors to limit their losses. It is a form of risk management that involves setting predetermined levels at which a trader will exit a position if the price of the asset moves against them. This strategy is used to protect against large losses, as the trader will exit the position before the losses become too great.
History of Stops Building
The concept of stops building has been around for centuries, but it was not until the advent of modern financial markets that it became widely used. The strategy was first used by traders in the commodities markets, where they would set predetermined levels at which they would exit a position if the price of the commodity moved against them. This strategy has since been adopted by traders in other markets, such as stocks, currencies, and futures.
Comparison Table
| Strategy | Risk Management | Losses Limited |
|---|---|---|
| Stops Building | Yes | Yes |
| No Strategy | No | No |
Summary
Stops building is a financial term used to describe a strategy used by investors to limit their losses. It is a form of risk management that involves setting predetermined levels at which a trader will exit a position if the price of the asset moves against them. This strategy is used to protect against large losses, as the trader will exit the position before the losses become too great. For more information on stops building, investors can visit websites such as Investopedia, The Balance, and Investing.com.
See Also
- Risk Management
- Stop Loss Order
- Limit Order
- Take Profit Order
- Trailing Stop Order
- Position Sizing
- Asset Allocation
- Diversification
- Portfolio Rebalancing
- Volatility
