What is a Stop Order?

A stop order is an instruction to submit a buy or sell market order if and when the client-specified stop price hits. A stop order does not guarantee a specific execution price and may execute significantly away from its stop price.

A sell stop order is entered at a stop price below the current market price to limit the loss on a long position or protect its profit.

A buy stop order is entered at a stop price above the current market price to limit the loss on a short position or protect its profit.