When you give an order to buy or sell a stock or other security once it has reached a certain price, the price you name is known as the stop price.
When you ask your broker to buy, your stop price is higher than the current market price. When you're selling, the stop price is lower than the current price.
In either case, once the stop price has been reached, your broker will execute the order even if a flurry of trading drives the stock's price up or down quickly. That might mean you end up paying more than the stop price if you're buying or get less than the stop price if you're selling.
- Browse Related Terms: capital gain or loss, Contingency order, Day trader, Floor trader, home equity, Limit order, Limit price, Markdown, markup, Stop price, Stop-limit order, Tailgating, Trader