Stop Order

Filed Under » , , , ,
Dictionary Says

Definition of 'Stop Order'

An order to buy or sell a security when its price surpasses a particular point, thus ensuring a greater probability of achieving a predetermined entry or exit price, limiting the investor's loss or locking in his or her profit. Once the price surpasses the predefined entry/exit point, the stop order becomes a market order.

Also referred to as a "stop" and/or "stop-loss order."

Investopedia Says

Investopedia explains 'Stop Order'

Investors commonly use a stop order before leaving for holidays or entering a situation where they are unable to monitor their portfolio for an extended period.

Stops are not a 100% guarantee of getting the desired entry/exit points. For instance, if a stock gaps down, the trader's stop order will be triggered (or filled) at a price significantly lower than expected.

Traders who use technical analysis will place stop orders below major moving averages, trendlines, swing highs, swing lows or other key support or resistance levels.

Related Video for 'Stop Order'

Articles Of Interest

  1.

    Trading Is Timing

    Learn how to make gains even if you don't get in at the right time.

  2. Forget The Stop, You've Got Options

    Using options instead of stop-loss orders adds finesse and control in limiting losses.

  3. Trading The MACD Divergence

    Currency traders can use this method to avoid stop-order triggers before the real reversal.

  4. What are the rules for placing stop and limit orders in forex?

    The high amounts of leverage commonly found in the forex market can offer investors the potential to make big gains, but also to suffer large losses. For this reason, investors should employ ...

  5. Top 3 Mistakes That Cause Traders To Fail

    Find out how to avoid these common investing errors that have sunk many investors' portfolios.

  6. Trailing-Stop Techniques

    The important decision to exit a position must be based on more than emotion if you want to be a disciplined trader.

  7. How To Place Orders With A Forex Broker

    Learn how to set each type of stop and limit when trading currencies.

  8. Stop Hunting With The Big Forex Players

    Learn to bank short-term profits by placing stops away from the crowd.

  9. Is The Stock Market Rigged?

    Many would-be, first-time investors in the stock market do not believe it is a fair playing field.

  10. The Basics Of Trading A Stock

    Taking control of your portfolio means knowing what orders to use when buying or selling stocks.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Network Effect

    A phenomenon whereby a good or service becomes more valuable when more people use it. The internet is a good example...

  2. Racketeering

    Racketeering refers to criminal activity that is performed to benefit an organization such as a crime syndicate. Examples of racketeering activity include...

  3. Lawful Money

    Any form of currency issued by the United States Treasury and not the Federal Reserve System, including gold and silver coins, Treasury notes, and Treasury bonds. Lawful money stands in contrast to fiat money, to which the government assigns value although it has no intrinsic value of its own and is not backed by reserves.

  4. Fast Market Rule

    A rule in the United Kingdom that permits market makers to trade outside quoted ranges, when an exchange determines that market movements are so sharp that quotes cannot be kept current.

  5. Absorption Rate

    The rate at which available homes are sold in a specific real estate market during a given time period.

  6. Yellow Sheets

    A United States bulletin that provides updated bid and ask prices as well as other information on over-the-counter (OTC) corporate bonds...
Trading Center