Stop Order

Market Mechanics

A stop order waits until the stock trades at a price you set and then becomes a market order; it is mostly used on the sell side to limit losses.

Because it turns into a market order, a fill at the stop price is not guaranteed. A stop-limit order becomes a limit order instead when triggered: it caps the price but may not fill.

Example

You own a $50 stock with a stop sell at $45. If bad news hits overnight and the stock opens at $40, the order triggers but fills near $40, not $45.

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