A stop-loss is your safety net in trading it automatically sells your position if the price drops to a set level, limiting losses. As a beginner, it’s essential for good habits. This guide uses Interactive Brokers (IBKR), a top broker for Aussies. We’ll cover stop and stop-limit orders.
Why Use a Stop-Loss?
It enforces discipline: Decide your exit before emotions kick in. For example, risk only 1-2% of your account per trade. In volatile markets like 2025, it prevents small losses from becoming big ones.
Types:
Stop order: Sells at market price when triggered.
Stop-limit: Triggers a limit order (specific price range).
Step 1: Log Into IBKR Trader Workstation
Open the app or desktop platform. If new, practice in “Paper Trading” mode.
Step 2: Find Your Position or Create an Order
For existing position: Right-click the stock in your portfolio.
For new trade: Search the stock (e.g., “BHP”), click “Buy,” set shares.
Step 3: Attach a Stop-Loss
Right-click the order line.
Select “Modify” > “Attach Profit Taker/Stop Loss.”
Choose “Stop” or “Stop Limit.”
Set trigger price: E.g., if buying at $100, set stop at $95 (5% loss).
For stop-limit, add limit price (e.g., sell between $94-$95).
Adjust quantity if partial.
Step 4: Review and Submit
Check preview: Trigger, type, time-in-force (e.g., “Day” or “GTC” for good-till-canceled).
Submit. You’ll see it attached in the orders tab.
Step 5: Monitor and Adjust
Use alerts (bell icon) for triggers. Edit by right-clicking the order.
Example
Buy 100 BHP at AUD$40. Set stop-loss at $38 (5% risk). If price hits $38, it sells automatically.
FAQs
Stop sells at market; stop-limit at your price range (but may not execute if market gaps).
IBKR charges standard commission (~AUD$0.08/share min).
Yes, in IBKR Mobile under “Orders.”
Key Takeaways
Stop-losses protect capital set them every trade. Practice in demo first.
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Disclaimer: Education only. Stop-losses don’t guarantee execution in fast markets. Seek professional advice.