Once you know which stock you want to buy and the price you want to pay for it, you can use what's called a "limit order" to make sure you won't pay more than you want for a stock.

With a limit order, you are telling your broker exactly what you want to buy and how much you want to pay. For example, you tell your broker, "I want to buy a hundred shares of XYZ Widgets at no more than $35 per share." Online trading platforms also allow you to enter limit orders.

You can make your limit order good just for the day (a "day order") or you can make the order "good 'til canceled." A good 'til canceled, or GTC, order will stay in place until you cancel the order.

You can also issue a limit order to sell to either take profits or minimize losses. For example, you might tell your broker to sell your shares of XYZ Widgets only if the share price reaches $40. Once the stock hit $40, your order would be triggered and you'd pocket your $5 per share profit.

Using a limit order to minimize losses is called a stop-loss order. It gives you some protection against falling stock prices by helping you get out of the stock automatically when it falls. When your stock dips to the stop-loss price you give your broker, your stop-loss order is triggered and your stock is sold at the next available price.

In our current example, say you wanted to limit any potential loss to 10%. You would set your stop-loss order at $31.50.

Dolan Warning: This is important to keep in mind. A stop-loss offers you some protection, but in if a stock or the market is plummeting, the next available price could be substantially lower than your stop-loss price. Just be aware that the stop-loss does not guarantee you'll be able to sell the stock at your set price.

If you're an active investor, you can use mental stop losses. The difference here is that you don't formally enter a stop-loss order with your broker. Instead, you monitor your stock and, if it falls below your limit, you then decide whether you still want to sell based on current circumstances.

Check out our guides to investing with stocks:

• How to Choose a Successful Stock
• Exercise Your Rights as a Shareholder
• Know When to Fold 'Em