Stop order

A stop order is a specialty brokerage order that triggers an action when the stock hits a specified price.

Contents 1 Expanded Definition 2 Expanded Definition 3 Related Terms 4 Recent Mentions on Fool.com

Expanded Definition

For example, if you bought a stock at $10 that's now trading at $20 and you want to "protect" some of your gains, you can place a sell stop order with your broker at say $18. If the stock price drops to $18, a simple sell stop order will trigger an immediate market sale, which means you'll get the price of the next available shares. It should be noted that a simple sell stop order does not guarantee a price of $18 on your sale, but it does guarantee execution.

When triggered, a stop order becomes a market order.

Expanded Definition

Related Terms

• Market order
• Stop limit order

Recent Mentions on Fool.com

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