| an order from a customer to a broker to sell a security if the market price drops below a designated level. |
Stop-Loss Order
An order placed with a broker to sell a security when it reaches a certain price. It is designed to limit an investor's loss on a security position. This is sometimes called a "stop-market order".
Investopedia Commentary
In other words, setting a stop-loss order for 10% below the price you paid for the stock would limit your loss to 10%.
It's also a great idea to use a stop order before you leave for holidays or enter a situation in which you will be unable to watch your stocks for an extended period of time.
Related Links
The Stop-Loss Order - Make Sure You Use It
Trailing-Stop Techniques
The Basics Of Order Entry
Limiting Losses
See also: Buy-Stop Order, Stop Order, Stop-Limit Order
stop order
An order to buy or to sell a security when the security's price reaches or passes a specified level. At that time the stop order becomes a market order and the executing broker, usually the specialist, obtains the best possible price. A stop order to buy must be at a price above the current market price and a stop order to sell must have a specified price below the current market price. See also buy stop order, electing sale, protective stop, sell stop order, stop-limit order, stop price, trailing stop.
An order from the SEC suspending a registration statement when an omission or a misstatement has been found.
