What is a Stop Order?

  • There are two types of Stop Orders:

     

    A Buy Stop Order would be used when the target price is higher than the current market price. The order will be executed at that price or higher.

    Example:

    • TSLA is trading at $1,000 and rising. So you place a maximum on the amount you will buy the stock at, such as $1,050. If it reaches this maximum amount, we will execute the Buy Stop Order
    • There are 2 options to select from in terms of when the order would expire if the target price is not reached:
      • At the end of trading on the next US business day
      • When the customer chooses to cancel

     

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    A Sell Stop Order would be used when the target price is lower than the current market price. The order will be executed at that price or lower.

    Example:

    • TSLA is trading at $1,000 and falling, so you decide to place a floor on the price you will sell at, $950. If the market drops to this price, we will execute the Sell Stop Order
    • There are 2 options to select from in terms of when the order would expire if the target price is not reached:
      • At the end of trading on the next US business day
      • When the customer chooses to cancel

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