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 ?
The latest example was the Tokio Marine HCC agreement in October to purchase American International Group's stop-loss operations, which produce gross written premium of about $350 million annually.
Observers have said that those may be using stop-loss insurance arrangements with attachment points, or deductibles, of $50,000 or less as if the arrangements were high-deductible major medical coverage, without understanding that stop-loss carriers operate outside the rules that apply to major medical coverage.
Jay Ritchie, an executive from a stop-loss insurance issuer, testified on behalf of the SIPA bill Wednesday, at a hearing in Washington organized by the House Education and Workforce Committee.
James, whose company sells stop-loss insurance, agrees that these disputes happen.
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.
was self-insured with a health plan management company overseeing its stop-loss insurance.
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.
A typical employer that self-insures might make the employee pay a $1,000 deductible, take care of claims between $1,000 and $50,000 in-house, and use stop-loss to handle claims between $50,000 and $1 million.
Eligible members will receive $500 per month for each month or portion of a month they were retained past an established separation or retirement date and served on active duty as a result of stop-loss.
Some news reports recently noted that the proportion of Oregon National Guard troops affected by stop-loss today, 15.
11) A chronological summary of Stop Loss actions by service and the occupational specialities that were impacted can be found in Appendix VI: Service Stop-Loss Policies since September 11, 2001 in GAO Report 04-1031, Military Personnel: DOD Needs to Address Long-term Reserve Force Availability and Related Mobilization and Demobilization Issues, September 15, 2004.