XYZ bought 1000 shares a year ago at P51 per share. Now, the stock price is P 55 per share. XYZ thinks that the stock has potential and does not want to liquidate its position. XYZ place a stop loss order with a price of P53.

1. Aside from execution, what happen if the stock price drops to P53? And what position or move are you going to do?pls explain further.

2. Why will XYZ gain? (show solution)

* and why are you not going to use the current price 55?

3. What happens if the stock price continue to increase without hitting my stop loss order? pls explain further.