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Stop Loss Order
Term category: General Investing, Stocks
In 10 words or less:  A type of order that helps investors limit their downside risk.

Definition: An order to automatically sell a stock at a if it drops below a pre-specified price.

StockJargon Advice: For example, if you own XYZ stock at $40 per share and want to sell it if it drops to $35 per share, you would put in a stop-loss order. This allows you to minimize your losses because if XYZ dropped to $30 per share, you would have sold it at $55 per share.

We recommend using stop loss orders with your trades. But don't put an order in for a price that's close to what it's trading at now. Otherwise, the stock might dip below it in intraday and then rise again. If that happened, you'd sell it before you wanted to.

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