Using Orders to Initiate and Protect a Position

What this video covers

• The two distinct jobs of an order ticket: initiating a position (getting in) versus protecting it (limiting loss)
• Why a protective stop for a long is a sell stop placed below the market, and why a buy stop above the market is backwards
• Why a protective stop for a short is a buy stop placed above the market, and how this caps theoretically unlimited risk
• What Good Till Canceled (GTC) means, and why a day-only protective stop leaves a position unguarded overnight
• The critical distinction between a plain stop (guarantees a fill, not a price, with slippage risk in gapping markets) and a stop-limit (guarantees a price or better, but may not fill at all)
• Why placing the protective stop immediately upon initiating the trade is the only disciplined answer the exam accepts
• How answer choices routinely flip the side or direction of stops, and how to spot the trap