Protect your gains or limit your losses while on vacation

09 May 2022 by Alexandre Demers
A couple is canoeing on a lake with turquoise waters.

Who hasn't dreamed of taking a well-deserved vacation without worrying about work, daily chores and their investments? Did you know that you can easily use different tools to maintain control over your portfolio without having to constantly stare at a screen? It’s possible to protect your gains or limit your losses with stop loss orders and to stay informed of price changes with alerts.


Ready to start investing? Let's find the right savings plan for you.

What is a stop loss order?

A stop loss or sell stop order allows you to set up the sale of your shares automatically at a predetermined trigger price. The main purpose of stop loss orders is to potentially sell your shares to secure a gain in the event of a decrease in the share price. Of course, if the share price does not decrease to reach the trigger price, you will keep the shares until the end of the chosen period.

What is the trigger price and the limit price?

With the National Bank Direct Brokerage platform, when you enter a stop loss order, you must always indicate a trigger price and a limit price. The trigger price is the amount at which you want to sell your shares and the limit price is the minimum amount at which you agree to part with your shares. 

Stocks and ETFs

What do you need to know about the trigger price and the limit price?

Here are some things to consider before placing a stop loss order. 

1. The smaller the spread between the trigger price and the limit price, the more likely it is that the stop loss order will not be executed in the event of a sharp fall in the share value. 

2. The closer the trigger price is to the share value, the greater the chances of having the sell order triggered. 

As an example, let's say the share price is $35.00. To limit your loss or protect a profit, you decide to enter a stop loss order with a trigger price of $34.00 and a limit price of $33.50. Let’s continue with the example by imagining that the next morning, when the market opens, the bid price of the stock drops to $33.90. In this case, since the stock value is below the trigger price and above the limit price, the stop loss sell order will be triggered and will become a market sell order.

That said, if the share value opened at $33.00 the next day, which is below the stated price limit of $33.50, the stock would not be sold.

3. The price limit in a stop loss order must be considered as the minimum value required to sell the security.
In other words, below $33.50 the investor prefers to keep the share rather than sell them. 

Discover how to create an alert

What are the advantages of a stop loss order?

Since you aren’t always in front of your screen watching your stock prices, you may be surprised by a sudden movement in the price of one of your holdings. You may have already experienced a situation where you would have preferred to sell faster to avoid losses or to take profits. That’s why it’s important for self-directed investors to understand how to use stop loss orders.

On the one hand, a stop loss order allows you to set a selling price in the event that the share value drops below your purchase amount. You can therefore use stop loss orders to intentionally limit the maximum loss to which you are exposed. This type of order makes it easier to manage your emotions by determining in advance the price at which you will sell your shares. For some investors, this is a way to avoid significant losses by not hanging onto a stock that keeps falling.

Stop loss

*Source : Market-Q

In the example above, you can see that the sell stop order at $63.00 allowed the investor to significantly limit their loss during this transaction. 

A stop loss order also allows you to protect some of your gains. Much like anchors for rock climbing, you can use stop loss orders to prevent your profits from dropping to zero. By setting a sale price higher than your original purchase price, you can systematically secure a portion of your gains. If the price is not reached, the shares will not be sold, and you can continue to benefit from the increase in the share price.

Secure gain

*Source : Market-Q

As shown in the image above, a stop loss order protects a large portion of an investor’s profits if the share price were suddenly to drop back to $67.00. 

Why use price alerts?

In addition to managing your risk with stop loss orders, you can also use alerts to stay informed of fluctuations in a stock's price. Indeed, to avoid having to constantly track price fluctuations in all the shares you own, it is possible to create alerts and receive notifications directly by email.

Create Alerts

For example, thanks to alerts, you can enter a target price where you would be interested in selling and when the share price has reached the indicated value, you will receive a notification. Similarly, you can also be informed of a percentage change in a day or a variation over 52 weeks. Alerts always allow you to be informed of fluctuations in the price of your shares and to be able to react before it is too late.

How can you manage the risk of your portfolio in a calculated way?

In short, stop loss orders can be an effective tool for managing risk for investors who cannot track the price of their shares in real time. Using this type of order and creating alerts can help you limit your losses and keep control of the positions in your portfolio. In addition, stop loss orders can also reduce the emotional component of the transaction by requiring you to stay true to your initial analysis with regard to your risk-taking. In summary, it’s very much in your interest to understand stop loss orders and alerts when you trade stocks or ETFs yourself.

Log in to program alerts and stop loss orders while you’re on vacation

Author biography: Alexandre Demers has been an active investor since 2013 and is the founder and president of Traders 360 Inc. He has also authored the e-book “Investir à contre-courant” (Investing against the grain) and hosts the “Finance 360” podcast available free on Spotify and Apple Podcast. His goal is to make stock trading more democratic and educate the public at large about the possibilities of self-managed investments.

For more details, go to

The above article was written by Traders 360, an independent external firm partnered with National Bank Direct Brokerage.


Legal disclaimer

Commissions, management fees and expenses all may be associated with investments in exchange traded funds. Please read the ETF Facts or prospectus of the BMO ETFs before investing. Exchange traded funds are not guaranteed, their values change frequently, and past performance may not be repeated.

For a summary of the risks of an investment in the BMO ETFs, please see the specific risks set out in the BMO ETF’s prospectus.  BMO ETFs trade like stocks, fluctuate in market value and may trade at a discount to their net asset value, which may increase the risk of loss. Distributions are not guaranteed and are subject to change and/or elimination.

BMO ETFs are managed by BMO Asset Management Inc., which is an investment fund manager and a portfolio manager, and a separate legal entity from Bank of Montreal.

®/TMRegistered trade-marks/trade-mark of Bank of Montreal, used under licence

The articles and information on this website are protected by the copyright laws in effect in Canada or other countries, as applicable. The copyrights on the articles and information may belong to the National Bank of Canada, its subsidiaries or other persons. Any reproduction, redistribution, communication by telecommunication, including indirectly via a hyperlink, or any other use thereof that is not explicitly authorized, of all or part of these articles and information, is prohibited without the prior written consent of the copyright owner.

The content of this Web site is provided for general information purposes and should not be interpreted, considered or used as if it were financial, legal, fiscal, or other advice in any way. In addition, the information presented on this Web site, whether financial, fiscal or regulatory, may not be valid outside the province of Quebec.

This article is provided by National Bank Direct Brokerage (NBDB) for information purposes only. It creates no legal or contractual obligation for NBDB and the details of this service offering and the conditions herein are subject to change.

The hyperlinks in this article may redirect to external websites not administered by NBDB. NBDB cannot be held liable for the content of external websites.

Views expressed in this article are those of the person being interviewed. They do not necessarily reflect the opinions of NBDB.






Contribute to your RRSP or TFSA without leaving your home