Series 24: 5.5.2.2.1.3. Stop Orders

5.5.2.2.1.3.  Stop Orders

Stop orders are orders that become market orders when the market reaches a particular price. In other words, once the market has passed the specified price, the stop order is triggered, and the security will be bought or sold at the next available price (whether higher, the same, or lower than the trigger price). Stop orders are also called stop-loss orders or stop market orders.

Investors and traders may place sell stop orders below current market prices to protect against a large drop in a stock’s price. If a stock begins to decline and moves