# Stop Orders > A stop order becomes a market order once a trigger price trades. Learn how stop losses and buy stops work, where to place them and why stops can slip. Source: https://learn.tradelabsai.com/orders/stop-orders/ Track: Orders and Execution · Level: Beginner · Updated: 2026-10-03 Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice. Cite as: TradeLabs Learn, "Stop Orders", https://learn.tradelabsai.com/orders/stop-orders/ A stop order is an order that waits, inactive, until the market trades at a price you choose, called the stop price. Once that happens, it becomes a market order and fills at the next available price. Stop orders are best known as **stop losses**, which get you out of a trade that has gone wrong, but they are also used to **enter** trades when price breaks through a level. ## The two kinds of stop orders | Order | Placed | Triggers when | Used for | |---|---|---|---| | Sell stop | Below the current price | Price falls to the stop | Stop loss on a long position; entering a short on a breakdown | | Buy stop | Above the current price | Price rises to the stop | Stop loss on a short position; entering a long on a breakout | ## A stop loss example **Example: Protecting a long position** You buy 100 shares at $60.00 and place a sell stop at $57.50. You are risking $2.50 per share, $250 in total. **Normal case:** the price drifts down and trades at $57.50. Your stop triggers and fills at $57.48. Loss: $252. **Fast case:** bad news hits and the price drops from $58.00 to $56.20 in seconds. Your stop triggers at $57.50 but the next available bid is $56.20. Loss: $380. **Gap case:** the stock closes at $58.50 and opens the next morning at $52.00 after weak earnings. The stop triggers at the open and fills near $52.00. Loss: about $800. The stop did its job in each case: it got you out. But it guarantees an exit, not a price. That is the trade off of a stop order. See [Slippage](https://learn.tradelabsai.com/markets/slippage/). ## A buy stop entry example A stock has repeatedly failed to rise above $45. You believe a break above $45 would start a new move. You place a buy stop at $45.10. If the price trades at $45.10, your order becomes a market buy and you join the breakout. If the breakout never happens, you never enter. See [Breakout Trading](https://learn.tradelabsai.com/strategies/breakout-trading/). ## Where to place a stop loss A stop belongs at the price where your trade idea is proven wrong, not at an arbitrary percentage: - **Below a support level** or swing low for a long trade; above resistance or a swing high for a short. See [Support and Resistance](https://learn.tradelabsai.com/price-action/support-and-resistance/). - **Outside normal noise,** using a measure like [ATR (Average True Range)](https://learn.tradelabsai.com/indicators/atr/) so ordinary fluctuations do not stop you out. - **Slightly beyond obvious levels,** because many stops cluster exactly at round numbers and recent lows. Then size the position so that hitting the stop costs only your planned amount. See [Position Sizing](https://learn.tradelabsai.com/risk/position-sizing/) and [Stop Loss Strategies](https://learn.tradelabsai.com/risk/stop-loss-strategies/). ## Stop orders and market hours On many stock brokers, stop orders are only active during the regular session, and they trigger based on trades on the primary market. A stock can fall through your stop in pre-market trading without triggering it, then open below it. Check your broker's rules for extended hours and for what price triggers the stop (last trade, bid or ask). ## Stop vs stop limit A stop limit order turns into a limit order instead of a market order when triggered, so it will not fill below your limit, but it may not fill at all. For a protective stop, a missed fill can be far worse than slippage. See [Stop-Limit Orders](https://learn.tradelabsai.com/orders/stop-limit-orders/). ## Common mistakes - **No stop at all,** hoping a losing trade comes back. - **Moving the stop further away** after the trade goes against you. - **Stops too tight,** inside normal noise, causing repeated small losses on trades that would have worked. - **Assuming the stop price is guaranteed.** It is a trigger, not a promise. - **Mental stops that are never executed.** If you will not act, use a real order. ## Frequently asked questions ### What is the difference between a stop order and a limit order? A limit order waits for a price you would like to trade at. A stop order waits for a price where trading becomes necessary, then fills at market. ### Why did my stop loss fill below my stop price? Because a stop becomes a market order when triggered, and in fast markets or gaps the next available price can be worse than the stop. ### Should I always use a stop loss? Most traders benefit from always having a defined exit and a real stop order. Without one, a single large move can cause losses far beyond your plan. ## Sources - U.S. Securities and Exchange Commission, [Stop order](https://www.investor.gov/introduction-investing/investing-basics/glossary/stop-order) ## Continue learning - Next lesson: [Stop-Limit Orders](https://learn.tradelabsai.com/orders/stop-limit-orders/) - Previous lesson: [Market vs Limit Orders](https://learn.tradelabsai.com/orders/market-vs-limit-orders/) - Related: [Market vs Limit Orders](https://learn.tradelabsai.com/orders/market-vs-limit-orders/): Market orders fill now at an uncertain price; limit orders fix the price but may not fill. Compare costs, risks and the right situations for each order type. - Related: [Stop-Limit Orders](https://learn.tradelabsai.com/orders/stop-limit-orders/): A stop-limit order becomes a limit order when its stop price trades. Learn how to set the stop and limit, when it protects you and when it can fail to fill. - Related: [Trailing Stop Orders](https://learn.tradelabsai.com/orders/trailing-stop-orders/): A trailing stop follows the price by a set amount or percentage and only moves in your favour. Learn how it works, how to set the distance and common pitfalls. - Related: [Stop Loss Strategies](https://learn.tradelabsai.com/risk/stop-loss-strategies/): A good stop sits where your trade idea is proven wrong. Compare structure, volatility, percentage and time stops, with examples and the mistakes to avoid. - Related: [Slippage](https://learn.tradelabsai.com/markets/slippage/): Slippage is the gap between the price you expect and the price you get. Learn what causes it, how to measure it and the practical ways to reduce slippage. - Related: [Order Types Explained](https://learn.tradelabsai.com/orders/order-types-explained/): Market, limit, stop, stop-limit and trailing stop orders explained with examples. Learn what each order does, when to use it and the mistakes to avoid. - Related: [Bracket Orders](https://learn.tradelabsai.com/orders/bracket-orders/): A bracket order attaches a stop loss and a profit target to an entry, and cancels one when the other fills. Learn how to set one up, with a worked example.