Setting a stop-loss
Yet more jargon? Yes, but possibly two of the most important words you will hear as an investor making your way on the worldwide web.
As the name suggests, it is a way of stemming losses. In setting a stop-loss you are saying you will sell the shares if the fall by a certain, specified amount.
Typically, that might be 10pc over a certain time period. Seasoned investors will tell you it is no good sitting tight waiting for a recovery, often it doesn't come.
Setting a level for the stop-loss is a difficult artform. Make it too small and all you'll succeed in doing is liquidating your share portfolio - at a loss.
Set it too high - say 20,30, or even 50pc and you'll end up incurring huge losses.
That's why 10pc is a good rule of thumb, and it's no good setting a stop-loss if you don't stick rigidly to it.