A stop order is a stock market order that aims to prevent additional losses. It instructs a broker to sell a stock when it reaches a specified price, limiting potential losses for the investor. For instance, if an investor purchases a stock at $50 and sets a stop order at $45, the broker will automatically sell the stock if its price drops to $45 or lower. This measure serves to safeguard the investor from further financial setbacks.
A stop order is a type of order placed with a broker to sell or buy a security at a specific price, aiming to limit losses or secure profits. For instance, if you own a stock currently trading at $50 per share and have concerns about its potential decline, you can set a stop order at $45 per share. In this case, if the stock price drops to $45, your broker will automatically sell the stock to minimize your losses. Conversely, if you wish to purchase a stock but only at a certain price, you can place a stop order to buy the stock once it reaches that price. Stop orders are beneficial for investors who want to safeguard their investments or capitalize on market movements without constant monitoring.
A stop order is a type of order placed with a broker to buy or sell a security when it reaches a certain price.
When the price of the security reaches the stop price, the stop order becomes a market order and is executed at the next available price.
The purpose of a stop order is to limit losses or protect profits by automatically triggering a trade when the price of a security reaches a certain level.
Yes, a stop order can be cancelled at any time before it is triggered.
If the price of the security gaps below the stop price, the stop order will be triggered at the next available price, which may be lower than the stop price.
Yes, a stop order can be placed on any security that is traded on an exchange.
There may be a fee for placing a stop order, depending on the broker and the type of account.
Yes, a stop order can be placed outside of market hours, but it will not be triggered until the market opens.
A stop order becomes a market order when the stop price is reached, while a limit order becomes a buy or sell order at a specified price.
Yes, there are risks associated with using a stop order, including the possibility of the price of the security moving quickly and triggering the stop order at a much lower price than anticipated.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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