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 ?
Stop-loss coverage protects self-funded employers from these claims, which impact 85% of self-funded employers in any given policy year.
When orders like this are triggered, they can result in massive amounts of coins (or stocks) hitting the market at one time, as traders tend to set stop-loss prices at nice round numbers like $6,000, $5,000, or, most recently, $4,000.
Stop-Loss Smart Practice No.I: Consider both aggregate and individual stop loss.
Specific stop-loss reimburses the plan sponsor for individual claims that exceed a specific level, called the attachment point or deductible, during the policy period.
Sponsors of self-insured plans often use stop-loss, or insurance for insurance plans, to protect themselves against catastrophic losses.
1304, the self-insurance plan bill, would limit states' regulatory role by excluding stop-loss insurance from the federal definition of health insurance coverage for purposes of the federal Public Health Services Act, the Employee Retirement Income Security Act of 1974, and the Internal Revenue Code.
ELMC owns, manages and seeks to acquire premier MGUs across the nation that specialize in underwriting medical stop-loss insurance for self-funded health plans.
Stamford's Independence Holding operated IHC Risk Solutions through its New York City-based unit American Independence, offering stop-loss coverage that self-insured organizations can buy that covers exorbitant medical costs incurred by any members.
While stop-loss orders were intended to offer a measure of protection, they in fact made it worse on both occasions.
Companies that self-insure often purchase stop-loss insurance to protect against large claims in the aggregate or on a per claimant basis.
Insurance carriers offer ASO as a turnkey solution, which in most cases is packaged with the carrier's stop-loss coverage, provider network and prescription benefits management, as well as its in-house utilization review management and large claim management.