What Is a Trigger Price in Trading? Understanding Stop-Loss and Stop-Buy Orders

Learn what a trigger price is and how it activates buy or sell orders to manage risk and secure profits in trading.

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Trigger price is a predetermined price level that activates a buy or sell order in trading. When the market price reaches this level, it triggers an automatic action, helping traders manage risk or secure profits. It's commonly used in stop-loss and stop-buy orders.

FAQs & Answers

  1. What is the purpose of a trigger price in trading? A trigger price initiates an automatic buy or sell order when the market reaches a specific level, helping traders manage risk and secure profits.
  2. How does a trigger price work with stop-loss orders? In stop-loss orders, the trigger price activates a sell order to minimize losses if the market price falls to a certain point.
  3. Can trigger prices be used for buy orders? Yes, trigger prices can activate stop-buy orders to purchase an asset once its price rises to a predetermined level.

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