Stop-loss order


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Related to Stop-loss order: Trailing Stop Loss Order, Trailing Stop Order

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 ?
Third and, perhaps, most importantly, investors have no assurance that trades triggered by their stop-loss orders will take place at a price that is anywhere close to their stop-loss trigger price.
11 attacks, stop-loss orders were last used during Operation Allied Force, the air war over Kosovo.
A stock might fall from $20 to $15, triggering a stop-loss order, and immediately shoot back up to $25 or even $30.
Other less dramatic drawbacks with stop-loss orders include what happens after the stop order is elected.
Other investors have fallen victim to stop-loss orders, which are ironically set up to automatically sell stocks when their prices fall to a certain level in order to protect investors from major losses.
07 yen with stop-loss orders cited below 101 yen and was last at 101.
Commentators have already suggested various possible triggers for yesterday's move: an input error by a trader (fat finger); liquidation by a hedge fund; falling prices triggering stop-loss orders placed at $ 115; heavy turnover by computer-driven trading programs; or some complex interaction among all these factors.
Euro buying accelerated at one point in the morning on stop-loss orders to sell the dollar for the European unit amid increased risk appetite triggered by the favorable U.
3211 as traders tried to hunt for stop-loss orders, slipping from a one-month peak of $1.
Stop-loss orders are activated on a daily close breaching the specified price level.
As the $1,925 level was broken the selling accelerated on the triggering of stop-loss orders.