Guaranteed stop loss
Family II · Orders
Not to be confused with stop limit order, stop order, trailing stop.
Guaranteed stop loss is an order type that fixes the worst-case exit price of a position. Unlike a standard stop, it carries a contractual promise that the position will be closed at the specified level even if the market jumps past it. The provider charges a premium or widens the spread for accepting that gap risk.
How it works
A guaranteed stop loss is placed at a chosen trigger price away from the current market price. When that price is touched, the position is closed at the guaranteed level, not at the next available market price.
The guarantee applies only to the stop itself. It does not protect against ordinary adverse movement before the trigger is reached, and it does not guarantee a profit. Providers typically require the stop to be a minimum distance from the entry price and may reject or re-quote orders placed too close to the market.
Because the provider assumes gap risk, the cost is explicit: either a separate premium charged when the order is placed, or a wider bid-ask spread on the position. The premium is usually non-refundable, even if the stop is never triggered.
Worked example
The guarantee saved 300.00 of slippage. The provider charges a premium for that protection, which is paid regardless of whether the stop triggers.
Costs and availability
Guaranteed stop loss orders are not offered in every market or by every provider. Where available, the premium or spread markup varies by instrument, position size, and the distance between the stop price and the market. Some providers apply a minimum charge per order.
Regulatory treatment also varies. In some jurisdictions, guaranteed stops are classified as a form of insurance and may be subject to different disclosure or capital rules than ordinary stops. Traders should check the specific terms of the provider and the applicable regulator before relying on the guarantee.
Often confused with
- stop limit order
- A stop limit order becomes a limit order once triggered and may not fill at all if the market gaps past the limit price, whereas a guaranteed stop loss fills at the specified level. The visible sign is that a stop limit order shows two prices, a stop and a limit, while a guaranteed stop loss shows one price plus a premium.
- stop order
- A stop order becomes a market order when triggered and fills at the next available price, which may be worse than the stop level, whereas a guaranteed stop loss fills at the stop level itself. The visible sign is that a stop order has no premium or spread markup attached, while a guaranteed stop loss does.
- trailing stop
- A trailing stop moves with the market in the favourable direction and stays a fixed distance from the best price reached, whereas a guaranteed stop loss is set at a fixed price and does not move. The visible sign is that a trailing stop's trigger price changes over time, while a guaranteed stop loss's trigger price remains constant.