What is Stop order (stop-market)?
Stop buyurtma (stop-market)
In short
An order that becomes a market order once price reaches a set level. Usually used to protect an open position (a stop-loss).
In a gap a stop can fill well below the set level, because price jumps straight over it.
A stop order (stop-market) is an order that sits dormant until price reaches a level you set (the stop price). As soon as price touches that level it becomes an ordinary market order and fills at the best available price.
Where it is used
Most often to protect an open position, i.e. as a stop-loss. On a long position the stop sits below the current price (a sell stop). There is also a buy stop for entering when price breaks out upward — it sits above the current price.
Key property: execution is guaranteed, price is not
Once triggered the order will fill, but not necessarily at the stop price. In a fast market or a gap price jumps over the stop and the order fills at a much worse price. A stop-limit order is the opposite: it caps the price but does not guarantee a fill — if price runs away, you stay stuck in the position.
How to place it well
Put the stop at a logical chart level — the place that shows your idea was wrong — and then size the position to that distance. A version that follows price is the trailing stop.
Bad news came out overnight and price opened at $45 after closing at $49.50. A plain stop became a market order and sold near $45 (−10%). The stop-limit ($47/$46) did not fill: price was below $46, so the position stayed open while price slid towards $43.
A bad report came out after the close: the stock that closed at $46.20 opened at $41.50. The $45 stop filled at the first available price — $41.50. The planned loss was $3 per share; the real one was $6.50.
Example
You bought 100 shares of a hypothetical stock at $40 and set a stop at $37. Planned risk: 100 × ($40 − $37) = $300.
Normal case. During the day price drops to $37, the stop triggers and fills at $36.95. Loss: 100 × ($40 − $36.95) = $305 — close to plan.
Gap case. Bad news comes out overnight and the stock opens at $33. The stop triggers at the open and fills around $33. Loss: 100 × ($40 − $33) = $700 — more than twice the plan.
Had you used a stop-limit ($37 stop, $36.50 limit), the order would not have filled at all at the $33 open — and if price kept falling, the loss could have been even larger. To size positions in advance: position size calculator.
Mistakes and tips
Don't place a stop exactly at a round number or an obvious level everyone sees — price often pokes through those briefly.
If you hold through an earnings report, remember a stop does not protect against a gap: trade smaller.
Once the stop is set, never move it further away in the losing direction — that raises your risk without a plan.
Frequently asked questions
- Is a stop-loss the same as a stop order?
- A stop-loss is the goal (limiting a loss); a stop order is one tool for doing it. A stop-loss can be placed as a stop-market or a stop-limit order.
- Why did my stop fill below my stop price?
- Once triggered it becomes a market order and takes the best available price. In a fast drop or a gap that price can be below your stop level.
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