Stop-loss order

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Stop-loss order

An order to unwind a position when the price moves against you. This order is designed to limit losses or in some cases to lock in a certain level of profit. As soon as the price of the security hits the stop-loss price (or falls below), the order becomes a market order. If you were short the asset, the stop-loss would trigger a purchase. Stop-losses are often disabled for after hours trading because prices are often quite variable and you could be executed at an unfavorable price. Stop losses are also usually calculated off the bid price (which is a measure of what people are actually willing to pay if the security is sold). Again, one needs to be careful because if there is lack of liquidity, the bid-ask spread could be large and you could be stopped out at an unfavorable price. Finally, some traders have rolling or trailing stop loss. As the price moves up the stop-loss is moved higher (say 20% below the current price).

Stop-Loss Order

An order to a broker to buy or sell a security at the best available price once a certain, stated price is reached. Suppose that price is $50. A stop order remains inactive until that security begins trading at $50, at which point the broker may fill the order at best price he/she is able to find. A stop-loss order is technically the same as a stop order, but carries the connotation of avoiding further losses rather than seeking to cash in on future gains. See also: Protective stop.
References in periodicals archive ?
This is all the more reason to not use stop-loss orders for ETFs in addition to individual issues.
It is just as likely that several unconnected factors (light hedge fund selling, a concentration of stop-loss orders and destabilizing feedback among computer-driven trading programs) came together to produce an unusually large and fast price move, defying the desire for a neat explanation.
Peirce and Richard bend over backward to portray King as a model soldier and genuine patriot who rebels against the stop-loss order not because of cowardice or politics, but because he feels personally betrayed by a government he's already served far beyond the call of duty.
Stop-loss orders are generally good-till-cancelled or standing orders with brokers to sell (or buy) a security held long (short) if the price moves below (above) a specified value.
Most investors don't realize that they can name the amount they're willing to pay for a stock, or that they can accept on the sale of shares by using stop-loss orders.
So far the military has issued no stop-loss orders (which prevent service members from separating from the armed forces under certain conditions) that would suspend discharges based on "don't ask, don't tell.
11 attacks, stop-loss orders were last used during Operation Allied Force, the air war over Kosovo.
The company's stock price dipped slightly on the news -- hovering between $24 and $26 a share, which some analysts speculated may have been the result of stop-loss orders after the price peaked around $27 a share in recent weeks.
Later that same day, when it appeared that the dollar would not move any higher, dealers began to take profits on long-dollar positions, triggering stop-loss orders, and a sudden decline in the dollar ensured.
This kind of market demands that short-term traders use properly set stop-loss orders," McKinley said.
Sterling plunged to a three-decade low in thin early Asian trade on Friday as a break of key technical support levels triggered a wave of stop-loss orders.
It can make sense to place stop-loss orders on stocks, which will trigger an automatic sale if the stock falls by a set percentage.