Firewall in Investor's Almanac | Investor's Almanac

In the context of investing, a firewall refers to a risk management strategy designed to shield your portfolio from significant losses due to market downturns or other unforeseen events. This approach involves setting up a protective barrier around your investments, similar to a technological firewall, to prevent substantial damage. By implementing a firewall strategy, investors can mitigate potential risks and ensure the long-term stability of their investments. For instance, investors can use [[stop-loss-orders|stop-loss orders]] or [[diversification-strategies|diversification strategies]] to create a firewall around their investments.