Investing Basics

What Is a Stop-Loss Order?

A stop-loss order is an instruction to sell a security automatically once its price falls to a specified level, called the stop price. When that price is reached, the order becomes a market order, which is intended to limit losses on a position but does not guarantee the exact sale price.

Stop-Loss vs. Stop-Limit

A stop-limit order becomes a limit order when triggered, which controls the price but may not be filled if prices fall quickly.

Gaps

If a price opens well below the stop, the order may be filled at a considerably lower price.

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🔗 Related Terms

Market Order Limit Order Volatility Risk Tolerance

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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.