Stop-Loss Order

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Dictionary Says

Definition of 'Stop-Loss Order'

An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor's loss on a security position.

Also known as a "stop order" or "stop-market order".
Investopedia Says

Investopedia explains 'Stop-Loss Order'

Setting a stop-loss order for 10% below the price you paid for the stock will limit your loss to 10%. This strategy allows investors to determine their loss limit in advance, preventing emotional decision-making.

It's also a great idea to use a stop order before you leave for holidays or enter a situation in which you will be unable to watch your stocks for an extended period of time.

Go deeper with this order strategy by reading our article on The Stop-Loss Order - Make Sure You Use It.

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