Glossary
Stop loss: definition
A stop-loss is an instruction to exit a position if the market trades at a trigger you set. It is a discipline tool. It is not a promise that the loss will stop at that price.
In practice
When the trigger prints, the stop typically becomes a market order or a limit, depending on the type. A gap can open past the trigger, and the fill follows the available book. In a halt there may be no fill until reopening. Some firms offer a separate order that promises a price and charges a premium for taking that risk. That is a different contract. Position sizing still matters, because the stop is only as good as the fill.
A worked example
A stop at 40 on a share that closes at 42 and opens at 35 after bad news will not sell at 40. It will sell near the open, if it sells. The loss is larger than the plan.
Related
Sources and review
Last reviewed: 2026-10-13. Next review due 2027-04-13. Status: editorial review of this page, not a live verification of every third-party fee.
Author: WiT Markets Editorial, Editorial desk. The WiT Markets editorial desk writes explanatory pages, comparison context and research notes. It separates sourced facts from items that are not confirmed, and it does not provide personal recommendations.
Reviewed by: WiT Markets Research Review.
Primary and regulatory sources
- FINRA — checked 2026-10-13
- Investor.gov — checked 2026-10-13