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 Order

    An order to buy or sell a security when its price surpasses a ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop ...
  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 Articles
  1. Active Trading Fundamentals

    Trailing-Stop Techniques

  2. Trading Strategies

    What Your Trading Charts Aren't Telling ...

  3. Options & Futures

    Protect Yourself From Market Loss

  4. Active Trading Fundamentals

    The Stop-Loss Order - Make Sure You ...

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center