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What is a stop order?
What is a stop order?
Mohamad Daou avatar
Written by Mohamad Daou
Updated over a week ago

A stop-loss order occurs when you want to buy or sell a security when the asset reaches a specific price.

These order types limit investor loss on a security and differ from limit orders.

When a certain stock price falls to the designated “stop” price, the order becomes a market order, and it executes at the next available price. Unlike sell limit orders, stop orders will not be executed if the price is higher.

To create a stop order, you need to specify:

  • Number of shares you want to sell

  • Stop price: price at which you do not wish to keep the position

  • Time in Force: whether the order will be pending until canceled or for one day only

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