Another important risk management concept presented in the CMT Level 2 curriculum is the use of stop-loss orders and trailing stops. A stop-loss order is a risk management tool used to limit potential losses by automatically selling a security when it reaches a certain price level. A trailing stop, on the other hand, allows traders to set a stop-loss order that adjusts dynamically based on the security's price movement. By using these tools, traders can limit their potential losses while allowing their profits to run.
: Outlines the core pillars—Theory, Classical Techniques, and Advanced Techniques. Core Curriculum Domains (Level II) cmt level 2 curriculum pdf