A stop order
(also stop loss order
) is an order to buy (or sell) a security once the price of the security has climbed above (or dropped below) a specified stop price
. (Note that both bid and ask
prices can trigger a stop order.) When the specified stop price is reached, the stop order is entered as a market order
(no limit). This means the trade will definitely be executed, but not necessarily at or near the stop price, particularly when the order is placed into a fast-moving market, or if there is insufficient liquidity available relative to the size of the order
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