What is the purpose of a Stop Loss order in stock trading? Option: "To limit losses by exiting the position at a specific price", "To maximize profits by selling at the highest price", "To track the stock's performance over time", "To buy shares at a predetermined price"

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What is the purpose of a Stop Loss order in stock trading?

"To limit losses by exiting the position at a specific price"

"To maximize profits by selling at the highest price"

"To track the stock's performance over time"

"To buy shares at a predetermined price"

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What is the purpose of a trailing stop-loss order?

To automatically exit a trade at the end of the trading day

To limit potential losses

To enter a trade at a specific price point

To secure profits as the trade moves favorably

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Which type of trading order is designed to automatically sell a security if its price falls below a predetermined level?

Market Order

Stop-Loss Order

Limit Order

Trailing Stop Order

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What is the author's recommended approach for setting stop-loss levels in trading?

Basing it on the stock's volatility

Using a fixed percentage of the entry price

Setting it at the previous day's low

Using technical indicators like moving averages

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How can a trader utilize resistance levels when entering a long trade?

As a signal to short the stock

As a potential target price for exiting the trade

As a stop-loss level to limit potential losses

As a guaranteed entry point for maximum profit

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What is the primary motivation behind shorting a stock?

To gain ownership in a company with strong growth potential

To profit from an anticipated increase in the stock's price

To capitalize on an expected decline in the stock's price

To generate income through dividends and interest payments