What is a Sell-Stop?

A Sell-Stop is a pre-established point at which we are going to feel uncomfortable about continuing to hold a position. This discomfort would occur because the weekly closing price has gone lower (in the case of a Long position) than we really want it to.

Sell-Stops are utilized to represent a point below which we do not want our Long position of a stock to travel – if it does, it is time to Sell.

Sell-Stops are determined initially as part of Step #3 (when we first Buy a stock) and are evaluated weekly and occasionally updated as part of Step #4.

Sell-Stops reduce risk -- initially by limiting losses -- ultimately by locking-in profits.