Properties of Stop Order

C

Stop orders are a type of conditional order in which an investor specifies a particular price at which to execute a trade. When the market price of the asset being traded reaches the specified stop price, the order is triggered and the trade is executed.

Of the options given, option D - continuous inflation - is clearly not a property of a stop order. The other options are all potential benefits of using stop orders, but only one of them is not a characteristic of a stop order.

Option A - protecting profits - is a common reason for using a stop order. If an investor holds a long position in an asset that has increased in value, they can set a stop order at a higher price to lock in their gains and protect their profits. This can help prevent the investor from experiencing a sudden reversal in the market that wipes out their gains.

Option B - minimizing losses - is another benefit of stop orders. If an investor holds a long position in an asset that has decreased in value, they can set a stop order at a lower price to limit their potential losses. If the market price falls to the stop price, the stop order is triggered and the investor's position is closed out, preventing further losses.

Option C - rapid execution - is also a potential benefit of using stop orders. When the market price reaches the specified stop price, the order is triggered and the trade is executed as quickly as possible. This can help ensure that the investor is able to exit their position at the desired price, without missing out on potential gains or incurring larger losses.

Therefore, the correct answer to this question is option D - continuous inflation - which is not a property of a stop order.