Stopped Out

AAA

DEFINITION of 'Stopped Out'

The execution of a stop-loss order. Stopped out refers to when an investor predetermines a price at which they want to sell if the stock's price falls, they place a stop-loss order. If they purchase a stock for $35 a share and doesn't want to continue holding the stock if it falls to $30 a share, they would place a stop-loss order for $30. If the stock did in fact fall to $30 a share, the investor's stop-loss order would be executed and the investor would be stopped out.

INVESTOPEDIA EXPLAINS 'Stopped Out'

While stop-loss orders are an effective strategy for limiting potential losses, they will sometimes be executed because market conditions are volatile or because the stock itself is volatile and not because the stock has experienced a lasting drop in price. The aforementioned $35 stock might fluctuate throughout the day and drop as low as $27 only to close back up at $36. The investor who placed a stop-loss order at $30 would no longer own the stock at the end of the day because they would have been stopped out, but this result could be undesirable since the stock ended up rising again rather than continuing to fall.

RELATED TERMS
  1. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches ...
  2. Material Amount

    The movement of a security's price to the extent that it confirms ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop ...
  4. Stop Order

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

    A type of order that will be submitted or canceled if set criteria ...
  6. Buy Stops Above

    A recommendation to buy a specific security when a the security's ...
RELATED FAQS
  1. How are Bollinger Bands® used in forex trading?

    Use Bollinger Bands in forex trading to identify entry and exit points with ranging trends or to spot increasing volatility ...
Related Articles
  1. Active Trading Fundamentals

    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.
  2. Trading Strategies

    What Your Trading Charts Aren't Telling You

    You may be missing some key statistics when following charts in the market.
  3. Options & Futures

    Protect Yourself From Market Loss

    There are several simple strategies you can use to protect yourself from downside risk.
  4. Active Trading Fundamentals

    The Stop-Loss Order - Make Sure You Use It

    It's a simple but powerful tool to help you implement your stock-investment strategy. Find out how.
  5. Investing Basics

    Understanding Risk Averse Investing

    Risk averse describes a low level of risk an investor is willing to accept on his investments. An investor who is risk averse prefers little risk and is willing to accept a lower return because ...
  6. Active Trading Fundamentals

    20 Rules To Trade More Professionally

    Break free from the pack and join the professional minority with an approach that raises your odds for long term prosperity.
  7. Options & Futures

    How to Use Commodity Futures to Hedge

    Both producers and consumers of commodities can use futures to hedge. We explain, using a few examples, how to achieve commodity hedging with futures.
  8. Trading Strategies

    You'll Lose Profits Without This Trading Strategy

    A trading edge defines your technical or strategic advantage in the highly competitive market environment.
  9. Investing

    Are You An Investor Seeking For More Income?

    For income-seeking investors, it's hard to turn down a double-digit dividend yield like that of Prospect Capital Corporation .
  10. Investing

    3 Major Risks For Annaly’s Investors

    Thanks to its double-digit dividend yield, Annaly Capital Management has long been a favorite among income-seeking investors.

You May Also Like

Hot Definitions
  1. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  2. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  3. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  4. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  5. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  6. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
Trading Center