🎯 Orders·beginner

Stop Order

Also called: stop entry order

An order that becomes a market order once price reaches a specified trigger level — used to enter on a breakout.

A stop order sits dormant until price reaches its trigger level. Once triggered, it converts into a market order and fills at the next available price. Stop orders are used in two ways: as stop losses (to exit a losing trade) and as stop entries (to enter a breakout). A buy stop is placed ABOVE the current price. Traders use it to enter long when price breaks resistance — you want to buy AFTER the breakout, not before. A sell stop is placed BELOW the current price. Traders use it to enter short when price breaks support. The risk of stop orders is slippage. Because they convert to market orders, you can get filled significantly worse than the trigger price during fast moves or news events. For breakout trades during news, slippage can eat 30-50% of your expected profit.

Real trade example

Traders who set buy stops on Gold above $2,080 in February 2024 got filled cleanly on the breakout and rode the move to $2,400 — the stop entry method outperformed waiting for a pullback that never came.

Related terms

Limit Order

beginner

An order to buy or sell at a specific price or better — guarantees price, not execution.

Market Order

beginner

An order to buy or sell immediately at the current market price — instant execution, no waiting.

Stop-Limit Order

intermediate

A combination order that triggers like a stop but fills like a limit — protects against bad fills during fast markets.

Buy Stop

beginner

A pending order to buy ABOVE the current price — used to enter long when a breakout above resistance occurs.

Sell Stop

beginner

A pending order to sell BELOW the current price — used to enter short when a breakdown below support occurs.

Sell Limit

beginner

A pending order to sell ABOVE the current price — used to enter short on a rally to a resistance or value level.

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