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 ?
Sun Life powers its Stop-Loss Benchmark with more than 2 million data points that are sourced from over 35,000 employer plan designs, approximately 21 million employee census records, and, through its unique partnership with Verisk Analytics, first-dollar claims representing $2.
There are regulatory challenges in many states that have placed new restrictions on the types of medical stop-loss insurance policies that can be written, Ferguson said.
Another advantage of using an independent TPA is that employers can buy a stop-loss policy from a variety of stop-loss carriers.
The amount of risk a self-insured firm bears depends on the level of stop-loss insurance coverage that firm is willing and able to purchase.
Service members who were discharged or released from the Armed Forces under other than honorable conditions are not permitted to receive retroactive stop-loss special pay.
Approximately 3,400 reserve component Airmen may have been affected by stop-loss.
Stop-loss was authorized by Congress after the Vietnam War.
Medical stop-loss insurance protects companies that self-fund their health insurance plans against large or catastrophic claims.
A risk that is difficult to reinsure on a stand-alone basis is more reinsurable in a whole-account stop-loss cover for several reasons.
Medical stop-loss policies are purchased by employers with self-funded health plans.
Excess Re), a stop-loss managing general underwriter and wholly-owned subsidiary of National Financial Partners Corp.
Over the past few years, the ranks of stop-loss carriers and third-party administrators have thinned in the face of a maturing insurance market and consolidation.