Stop-Loss Order
What is Stop-Loss Order?
An order to sell a security once its price falls to a set level, to limit losses.
Understanding Stop-Loss Order
When the stop price is reached, a stop-loss order becomes a market order and sells at the next available price. A stop-limit order instead becomes a limit order.
If a price gaps down, for example overnight, a stop-loss can fill well below the stop price. Stops can also trigger on brief dips that quickly reverse.