stop market order


Imagine a big sell order enters the market, absorbing all the buy orders all the way to down to $25. No one is willing to buy, except at $29.60, where someone still has an order to buy at that price.
A stop trade is when a trader sets a price target as a trigger to automatically sell a stock, should it reach that price. Because the investor’s order is triggered at the $160 mark, they miss out on additional gains that could have been made without the stop order. As long as there are willing sellers and buyers, market orders are filled. By using The Balance, you accept our. If the market price reaches the designated stop-order price, the order will become "live" and execute as a market order. If you're willing to accept the risks, this can be an effective strategy.

When prices are moving quickly, some traders would rather wait it out than accept a sudden large drop in price. Trading Order Types: Market, Limit, Stop, and If-Touched, Where to Place a Stop Loss Order When Trading, What Is Slippage, Its Effect, and Avoiding It While Day Trading. If the stock gaps above $185.00, the order will not be filled. "Trading Basics," Page 2. The main risk involved with a stop-loss order is the potential of being stopped out.
Stop-limit orders usually use two different prices—the stop price and the limit price. Another type of stop-loss order, the stop-limit order, is more complex and risky but can limit losses for patient traders. The investor above may have their shares sold for $160, $159.75, or $160.03. A stop-loss order is essentially an automatic trade order given by an investor to their brokerage to trigger a sale when a certain price level is reached to the downside. Under normal conditions, a stop loss market order will get the trader out at the price expected. Stop-market orders make that threshold official and save you from having to watch the market constantly to curb your losses. Market orders are trades placed to buy at whatever the market is willing to pay at that moment in time. A sell stop order is entered at a stop price below the current market price. If a stock is trading at $100 a share, that really means that the last trade that executed was at $100, but there are offers to buy for $99.95 (called the "bid"), or to sell for $100.05 (called the "ask"), or for $99.90, or $101.00, or whatever. Slippage is less likely to occur if you avoid day trading volatile assets or ones that have very low volume. If an adverse event occurs causing AAPL to fall, the investor’s order will be triggered when prices drop to the $160 mark. There are many different order types. The stock is now trading at $175, however, to limit any losses from a plunge in the stock price in the future, the investor places a sell order at a stop price of $160. Once the price crosses the predefined entry/exit point, the stop order becomes a market order. Your broker will fill your order at the lowest possible ask price, or combination of ask prices if necessary. The stop could cause a loss on a trade that would have been profitable—or more profitable—had not the sudden stop kicked in.

How Does Buying and Selling Move Market Prices?

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