Topic summary
Stop order
Extracted from the Wikipedia article Order (exchange).
Stop orders
A stop order or stop-loss order is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. A buy-stop order is entered at a stop price above the current market price. Investors generally use a buy-stop order to limit a loss, or to protect a profit, on a stock that they have sold short. A sell-stop order is entered at a stop price below the current market price. Investors generally use a sell-stop order to limit a loss or to protect a profit on a stock that they own. Investors can also use stop loss orders to counter a behavioural bias called the Disposition Effect.