Definition of Stop order:
A stop order is an order to buy or sell a security when its price moves past a particular point, ensuring a higher probability of achieving a predetermined entry or exit price, limiting the investor's loss or locking in a profit. Once the price crosses the predefined entry/exit point, the stop order becomes a market order.
Also referred to as a "stop" a stop order to sell that is linked to a limit order is referred to as a "stop-loss order.".
Clients order to a broker to buy or sell a commodity or security when a specified price is reached, either above (on a buy order) or below (on a sell order) the price current at the time the order is given. A stop order to sell becomes a market order when the item is offered at or below the specified price. A stop order to buy becomes a market order when the item is bid at or above the specified price. See also limit order.
How to use Stop order in a sentence?
- Stop orders are used to limit losses with a stop-loss or lock in profits using a bullish stop.
- Stop orders are of various types: buy stop orders and sell stop orders; stop market and stop-limit.
- Stop orders are orders that are triggered when a stock moves past a specific price point. Beyond that price point, stop orders are converted into market orders that are executed at the best available price.
Meaning of Stop order & Stop order Definition