UK Accounting Glossary
When the stop price is reached, a stop order becomes a market order. A buy stop order must be entered at a stop price above the current market price. Likewise, a sell stop order must be entered at a stop price below the current market price.
Investors generally use a buy stop order to limit a loss or to protect a profit on a stock that they have sold short. Investors generally use a sell stop order to limit a loss or to protect a profit on a stock that they own.
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This glossary post was last updated: 22nd March 2020.