What is a Time Stop?
Time stops are an example of instructions issued by an investor to a broker. Specifically, a time stop authorizes the broker to execute an order to exit a given position on a stock when a certain amount of time has passed. The time stop usually carries certain provisions that must be met in order for the order to be executed. The idea behind a time stop is to allow the investor to see if the value of the investment is moving in a direction that is desired. Often, this means that the stocks or other securities cited are performing as the investor believed they would perform. In the event that the investment is not living up to expectations within a specified amount of time, the broker is authorized to sell the stock or security and look for other investing opportunities on behalf of the investor. Investors make use of the time stop approach as a means of limiting risk with a given investing position. Since the main focus of investing is usually to make money, it is imperative that purch
