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Definition of the Week: Stop Order

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Stop Order

What is a stop order?

A stop order is a special order to buy or sell a security when its value reaches a specified price. After the specified price is reached, the order becomes a market order or limit order as designated by the client.

stockbrokers.com Explains Stop Orders

A stop order gives the investor another solid tool to stay ahead of the market. By specifying a particular price at which you wish to buy or sell a security at, you can have more control over your portfolio. It is important to remember that stop orders are not 100% guaranteed of getting your exact exit or entry point. Major fluctuations in the market may mean your order gets filled at a worse than expected price. Using a stop order allows the investor to buy or sell a security without having to monitor it constantly.  Stop orders are commonly used to limit potential losses or lock-in large gains.

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