stop loss orders
A stop loss order is an order placed with your broker to sell shares when a stock stock falls below a certain price that you decide. This is a common way of managing risk so that you can effectively lock in gains. For example, let's say that I own Stock Z, and its currently trading at 30 dollars. What I may decide to do is put a stop loss order at 27 dollars, while continuing to hold the company. If the share price slips below 27 dollars your shares are automatically sold. This enables you to sell your shares before others so that you don't take huge losses. If the company goes up, you continue to make gains. This is just one way of managing a stock with risk. In a similar situation, if you have shorted a stock, you can put this stop loss order and it will buy shares if the share price goes over a certain price.