Protective Stop
A strategy that aims to limit potential losses to a desired amount by using a stop-loss or stop-limit order.
Investopedia Commentary
For example, a trader or investor may execute a protective stop by setting a stop-loss order for 10% below what he or she paid for the stock, therefore limiting the loss to 10%.
Related Links
The Stop-Loss Order - Make Sure You Use It
The Nitty-Gritty Of Executing A Trade
Understanding Order Execution
Trailing-Stop Techniques
The Basics Of Order Entry
A Look at Exit Strategies
Limiting Losses
See also: Above the Market, Below the Market, Limit Order, Market Order, Stop Order, Stop-Limit Order, Stop-Loss Order
protective stop