Order Type
Stop Order — Definition & Example
An order that becomes a market order when a specified trigger price is reached.
Stop orders are dormant until the trigger price prints, after which they convert to market orders for immediate execution. Used most commonly as stop-loss orders to limit downside. Because they convert to market orders, they're subject to slippage during fast moves — gaps over the stop price can result in fills materially below the stop. Stop-limit orders mitigate this at the cost of execution certainty.
Example
Long position at ₹500, stop-loss at ₹490. When price prints ₹490 or lower, the stop converts to a market sell order. In a normal market it fills near ₹490; in a gap, it might fill at ₹485.
Related
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