DEFINITION of 'Gather In The Stops'

A trading strategy of driving down a stock's price by selling large amounts of stock in order to trigger preset stop-loss orders, which in turn enhances the decline of the stock.

BREAKING DOWN 'Gather In The Stops'

This strategy may seem confusing at first, but is actually rather simple. Gathering in the stops occurs when traders sell large quantities of stock with the intention of triggering stop orders. Once a set of stop prices is reached, new sell orders are activated and transacted, causing the stock price to fall once again. This effect is continuously repeated, triggering more stop orders and therefore a rapid decrease in the stock's price. Some exchanges may decide to suspend stop orders to mitigate this continuous effect.

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RELATED FAQS
  1. What does "gather in the stops" mean?

    "Gather in the stops" is a trading strategy used by investors to trigger stop orders already in place so that the price of ... Read Answer >>
  2. What's the difference between a stop and a limit order?

    Different types of orders allow you to be more specific about how you'd like your broker to fulfill your trades. When you ... Read Answer >>
  3. What is the difference between a stop order and a stop limit order?

    Learn the differences between a stop order and a stop limit order. Traders use these as stop losses and regular investors ... Read Answer >>
  4. What is the difference between a buy limit and a stop order?

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