Also called stop-loss

Stop order

A resting instruction that turns into a live order once the price crosses a trigger. Its purpose is to cap a loss without watching the screen.

Updated 2026-09-05

A stop order sits dormant until the price crosses a trigger, at which point it becomes a live order. Its usual purpose is to cap a loss on a position without having to watch it.

A plain stop becomes a market order when triggered, which means it will fill, possibly far from the trigger in a fast move. A stop-limit becomes a limit order instead, which protects the price and can leave you holding a position that has blown straight through your exit. Neither is safe; they fail in opposite directions.

Where to put one is a volatility question, not a round-number question. A stop inside the instrument's normal daily range will be hit by noise. This is what atr is for.

See also

  • Market order — An instruction to trade immediately at whatever price is available. It guarantees execution and guarantees nothing about the price you get.
  • Limit order — An instruction to trade only at a set price or better. It guarantees the price and guarantees nothing about whether you get filled at all.
  • ATR — The typical distance a price travels in a day. Used to size stops in the stock's own terms, so a volatile name gets more room than a quiet one.

← See this one in the deck

Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.

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