◈ GLOSSARY · TRADING & MARKETS
Stop-Loss Order.
A definition, in plain English — with the books that teach it.
ClearValue Books · reviewed against sources ·
◈ DEFINITION
What it means
Definition
A resting order that converts to a market sell once the stock trades through a trigger price you set. It's meant to cap the downside on a position without you having to watch it. The honest caveat: in a gap-down or fast tape, a stop becomes a market order at the next available print — which can be much lower than your trigger.
◈ IN PRACTICE
Example
You own a stock at $50 and set a stop-loss at $45. The stock closes at $46, then opens the next morning at $40 on bad news. Your stop triggers and fills near $40 — not $45.
◈ RECOMMENDED READING
