Can we use stop loss on index (mutual) fund?Can we set stop loss at 10% of today's price instead of buy price?

I'm considering on investing on either index fund or index ETF. But I want to be able to use stop loss just in case if something bad really happens ( example: Sept 911 ). My question is: can we use stop loss on index fund ( mutual fund )? For ETF, I know we can.

Also can we set a stop loss to AUTOMATICALLY follow 10% of today's price ( instead of our original buying price )?

CAN THIS BE DONE WITH INDEX FUND ( MUTUAL FUND)? OR ONLY CAN BE DONE WITH ETF? Example: I buy index fund at USD 130. 5 years later, the price of the index fund is USD 180. I set the stop loss at 10% of today's price ( 10% of USD 180 at USD 162 ). Then Sep 911 part 2 happens. The index fund suddenly drops to USD 50. However, I was saved because I already sell my index fund at USD 162.

Thanks a lot for your help.

Typically mutual funds can only be redeemed at Net Asset Value (NAV). Funds don't trade in the same way as ETFs, which have a current/intraday price. For ETFs, you can place stops/limits etc, but when a mutual fund is redeemed at NAV, you receive the end of trading day value. If you're looking for liquidity and trading flexibility, go with an ETF.

What the previous poster mentioned about stop losses is correct: a stop loss will not guarantee you a price. It simply triggers a market order when the ETF trades below your stop price. Depending on how quickly the market is moving, you could sell at a price substantially lower (or higher) than your stop price.

First, what you're describing is called a trailing stop but stops don't work like you think they do.

Just because you have a stop order in at 162 doesn't mean you'll be "saved". In a situation like 9/11 the price gaped lower rather than trading systematically, thus you're not assured of selling anywhere close to 162. A stop order simply means that once the stock/etf has traded at or below 162 a market order to sell is initiated. To go back to the 9/11 example, the market never opened on Tuesday and opened MUCH lower when it did finally open the following Monday. By then the market would have been much lower than 162 and if the first trade was indeed at 50 then that's where you would have sold. Remember that in order for you to sell there has to be a buyer. If the market is going to 50 then no one is going to pay 162.

While you can place a stop loss order on an ETF, mutual funds don't work. Reason: Their price is set once a day when the market is closed. That is the reason why people like ETF's. You may also wish to investigage the use of put options if you are concerned about a market calamity.