Stop-loss order


Also found in: Dictionary, Thesaurus, Medical, Legal, Wikipedia.
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 ?
Zhang, "Generalized correlation order and stop-loss order," Insurance: Mathematics & Economics, vol.
Women who volunteer for military service are subject to stop-loss orders. Following the first Gulf War in 1991, Congress relaxed many of the restrictions on women in combat.
If the stock keeps moving up, you can keep increasing your stop-loss order. With a stop-loss order, you know that if the stock trades at or rises above the stop order price, a market order will be executed.
Corrections took place in over-sold markets, which in turn saw stop-loss orders from the shorts being hit as prices rose.
While most cryptocurrency experts agree that there have been a few negative catalysts recently (we'll get to those in the next section), many say that the big swings we've been seeing can be attributed to automated selling based on stop-loss orders.
Other less dramatic drawbacks with stop-loss orders include what happens after the stop order is elected.
Finally don't forget about stop-loss orders. The euro might go back up or Greece might finally jump ship trigger a continental crisis and send everyone in Berlin scrambling for their leftover Deutschmarks.
The Fool responds: While some do like to set stop-loss orders to protect against price drops, others avoid them because stocks sometimes just plunge and then recover and go on to reach new highs.
Finally, the banks attempted to trigger stop-loss orders with clients to boost profits.
Investors can execute the same types of trades they can with stocks--selling short, using limit or stop-loss orders, buying on margin and even making option trades.
According to traders stop-loss orders -- automatic sale orders placed at pre-set levels to limit losses -- were triggered when gold was sitting on the edge of $1,200.
Traders said stop-loss orders were triggered when gold was sitting on the edge of $1,200.