Chapter 04 · Section 4.1

Stop Orders- Usage

Which of the following is the correct statement?

a) A stop order can only be used to close a position.
• b) A stop order can only be used to open a new position.
  No. A stop order can be used to open a new position, but as we have seen, it has other purposes as well.
  c) A stop order can be used to enter a new position and to liquidate a position.

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