Trading Risk · Financial education
What Is a Stop-Loss Order?
Quick answer: A stop order can trigger an instruction to buy or sell when a specified price is reached, depending on the broker and order type.
Understand the core concept
A sell stop order often becomes a market order when triggered. The final execution price can differ materially from the stop level.
See how it works
Stop-limit orders add a limit-price restriction but may remain unfilled during rapid moves.
Know the limitations
Gaps, limited liquidity and price volatility can create outcomes different from illustrations that assume continuous prices.
Put it into context
Read your brokerage's specific order-handling rules, available time-in-force settings and trading-hours limitations.
Try this yourself
Explain why an illustrated $5 per-share risk amount is not a guaranteed maximum loss.
Open the stock research worksheet →Continue learning
- ETF vs. Mutual Fund: Key Differences
- Risk Tolerance vs. Risk Capacity
- What Is Trading Volume?
- How Inflation Can Affect Investments
Check the original sources
Investor.gov education · SEC EDGAR company filings · FINRA Investor Insights
Educational material, not personal financial or trading advice. Initial publication: October 8, 2026. This article is not a substitute for checking current broker rules or company disclosures.