Stop Order

A stop order is a conditional order that activates when the market reaches a specified trigger price, also called a stop price.

Before the trigger condition is reached, the order generally does not execute like an ordinary active order. After activation, it may become a market or limit order depending on the stop-order type and exchange rules.

Main uses

• stop-loss — limiting losses or protecting part of an existing gain;
• take-profit — automatically closing a position at a target level.

The trigger price and actual execution price are not necessarily the same. If activation produces a market order, rapid price movement can cause slippage.