STOP ORDER Meaning and
Definition
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A stop order is a type of order placed by an investor or trader to execute a trade once the price of an asset reaches a predetermined level, known as the stop price. This order is commonly used to limit potential losses or lock in profits by automatically initiating a trade when a specific price point is reached.
When a stop order is placed, it becomes a market order once the stop price is reached. This means that the order will be executed at the prevailing market price at that time. The purpose of the stop order is to trigger a trade at the specified stop price or better, ensuring that the investor doesn't miss out on a desired entry or exit point.
Stop orders can be used in various trading scenarios, such as to limit losses in a falling market or to secure profits in a rising market. For instance, a trader who has bought a stock and wishes to limit potential losses might place a sell stop order below the market price. If the price of the stock falls to or below the stop price specified, the order will be triggered, and the stock will be sold.
In summary, a stop order is a useful tool for investors and traders to automatically execute trades at a predetermined price level. It serves as a safeguard against potential losses or helps secure profits, ensuring that trades are executed as desired.
Common Misspellings for STOP ORDER
- atop order
- ztop order
- xtop order
- dtop order
- etop order
- wtop order
- srop order
- sfop order
- sgop order
- syop order
- s6op order
- s5op order
- stip order
- stkp order
- stlp order
- stpp order
- st0p order
- st9p order
- stoo order
Etymology of STOP ORDER
The term "stop order" originated in the field of finance and stock trading. The word "stop" refers to a specific price level at which a trader decides to activate an order, either to buy or sell an asset. This type of order is called a "stop order" because it becomes a market order when the asset reaches or exceeds the specified stop price.
The etymology of the word "stop" in this context is traced back to the late 17th century. It is derived from the Middle English word "stoppen", meaning to block, close, or restrain. This Middle English word, in turn, comes from the Old English word "stoppian" with a similar meaning of blocking or closing.
Similar spelling words for STOP ORDER
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