Stop Orders

Stop orders are orders that create market orders when the specified trigger price is reached. As market orders, stop orders are not visible in the order book for any market participant.

A buy stop order is an order placed at a price above the market that will trigger the creation of a market buy order when the market trades at the stop price or higher.

A sell stop order is placed below the market and creates a market order if the market trades at or below the stop price.

There is no guarantee that an order triggered by a stop will be filled at the stop price. Instead, it is treated the same as any other market order. A stop is only activated when an actual trade takes place that is at or through the stop. Even if both the bid and offer are through the stop price (for example, when both the bid and the offer are higher than the buy stop price), it will not activate the stop.

Stop orders are often referred to as stop-loss orders in that they are often used to protect a trader's position from deteriorating beyond a certain point and stopping further loss. Positions can be initiated or closed out using stop orders. Stops are available on most futures (except for pro rata matched futures) but are unavailable on options.