Resistance level definition
A resistance level, or resistance, is the price point at which more traders sell an asset than buy, causing the value to reverse and a peak to form on a price chart. For a resistance level to form, the phenomenon must occur more than once, allowing a line to be charted showing a clear price point at which the market reverses.
Traders and technical analysts use resistance levels to understand trends in the marketplace from previous data and forecast what may be to come.
Stop losses are orders given to brokers to buy or sell a stock once it has reached a specific price point. The purpose of a stop loss is to prevent dramatic losses for investors due to rapid price fluctuations.
For example, if an investor purchased a share for a retail company for $25 per share, they could mitigate against significant losses by imposing a stop-loss price of $23. If the stock price falls to $23, all the shares will be sold at the market price to prevent further losses if the stock should continue to fall.