An order intended to exit after a trigger price is reached, though execution price can differ in fast markets.
How it works
A stop order activates after a trigger is reached and typically becomes a market order. A stop-limit adds a price boundary but introduces the risk of no execution.
Example
A sell stop at 45 may activate at 45 but fill below it if the market gaps or liquidity disappears.
Limitations
Stops do not guarantee the trigger price, can be activated by short-lived volatility, and may be unavailable or behave differently across venues and products.
Evidence LedgerHow this insight was built
Human reviewedThesis being tested
This definition explains Stop-Loss Order accurately, with its practical use and material limitations.
Key assumptions
- The named calculation or convention is stated where definitions vary.
- The example is illustrative and not a forecast or recommendation.
What could invalidate the view
- A different market, instrument, jurisdiction, or methodology may use the term differently.
- The cited authority may revise its guidance or terminology.
- Editorial ownership
- Market Master · reviewed
- Approval state
- Reviewed financial content
- Evidence currency
- Current evidence window
- Source coverage
- 2 documented sources
Sources used for this insight