Definition of Sell Stop Order

Sell Stop Order is an order placed beneath the current market for a security to protect a profit, to guard against a loss or to establish a short position.

Applying "Sell Stop Order" to Securities Exams:

Sell Stop Orders are mostly used to protect a profit or to guard against a loss on long stock position. Once the stock trade at or below the stop price the order will be elected and the stock will be sold. A sell stop order may also be used to enter or to establish a short position on weakness if a stock breaks important support.

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