Stop-loss order

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Related to Stop Loss Order: Limit order, Trailing Stop Loss 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).
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
"Clients should still be careful with Stop Loss orders though, these orders are not Guaranteed if a market gaps lower or higher from one price level to another.
This is maintained through automatic implementation of GSLOs, or 'Guaranteed Stop Loss Orders.' Stop Loss Orders do just that - they stop the trade out once the market prices reaches a pre-determined level.
Many think that uneasiness over the European government's inadequate response to their sovereign debit crises led to selling  that was exacerbated by automatic trading programs, triggered stop loss orders, frantic and abnormal trading on electronic platforms, and possibly human trading errors.
The market was offered throughout Friday with stop loss orders being triggered at $7,700, $7,600 and $7,500 to a low of $7,470.
If you choose to trade the markets following the re-election of President Obama, ensure you only invest what you can afford to lose and use stop loss orders.
The intraday dive dragged the stock market through several support levels and undoubtedly touched off massive stop loss orders.  The dramatic moves also likely triggered large buy and sell orders from automated trading programs.
Traders were taken by surprise with the sudden selling pressure in turn triggering stop loss orders. Though Friday's market improved slightly to close $12 down over the week at $541 it is hard to feel too positive over this much neglected metal.
Zinc: Having hit a low of $1032 on Monday, the three months price managed a good bounce which on passing the $1050 level on Wednesday triggered stop loss orders leading to what was to be the week's high of $1072 that day.
Nickel: The woes of this market continue unabated when support at around $4,400 was broken on Wednesday which saw stop loss orders take the forward price down to a $4,220 low before a slight improvement on Friday produced a $4,330 close representinga $1 05 loss over the week.
This powerful trading tool produces Buy and Sell recommendations and generates Take Profit and Stop Loss orders in real-time.
Fast computers are now in control, with stop loss orders automatically executed in a matter of microseconds.