Stop order
An order that becomes a market order once a trigger price is hit — most commonly used to limit losses on an open position.
A stop order sits at a trigger price and does nothing until the market touches that price. When triggered, it converts to a market order and submits for immediate execution.
Behavior matters: because the stop becomes a market order on trigger, your fill price can differ from the trigger price (slippage). In fast moves, the gap can be several points. Stop-limit orders exist as an alternative — they convert to limit orders on trigger — but if the market gaps through the limit price, the order doesn't fill at all, which is a worse failure mode for a stop loss.
Example
- Long ES at 4500, stop loss at 4498. Trigger price: 4498. If bid touches 4498, the stop converts to a market sell and fills at whatever the next available bid is.
Related terms
- Limit order
An order to buy at a specified price or lower, or sell at a specified price or higher — only fills if the market reaches that price.
- Market order
An order to buy or sell immediately at the best available price — guaranteed fill, no guarantee on price.
- Slippage
The difference between the price you expected to fill at and the price you actually got — usually worse than expected, especially in fast moves.
- Bracket order
A protective pair of orders — a stop loss and a profit target — attached to an entry as a one-cancels-other group.
- Breakeven stop
A stop loss adjustment that moves your stop to your entry price (plus an offset) once the trade has reached a defined favorable condition.