Gather In The Stops


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.

  1. Nasdaq

    A global electronic marketplace for buying and selling securities, ...
  2. Exchange

    A marketplace in which securities, commodities, derivatives and ...
  3. New York Stock Exchange - NYSE

    A stock exchange based in New York City, which is considered ...
  4. Stop Order

    An order to buy or sell a security when its price surpasses a ...
  5. Sell

    The process of liquidating an asset in exchange for cash. The ...
  6. Order

    An investor's instructions to a broker or brokerage firm to purchase ...
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