Sell stop order
Family II · Orders
Not to be confused with stop loss, stop limit order, stop order.
Sell stop order is a conditional order that rests until the market trades at or below a specified stop price, at which point it is triggered and sent as a market order to sell. It is used to exit a long position or initiate a short position when price moves against the current trend. The execution price after triggering is not guaranteed and depends on available liquidity.
How a sell stop order works
A sell stop order is placed below the current market price. Until the stop price is reached, the order is dormant and does not interact with the order book. When the market trades at or below the stop price, the order is activated and becomes a market sell order, which is filled at the best available bids.
Because the order becomes a market order, the actual fill price can differ from the stop price, especially in fast or thin markets. This difference is called slippage. Some markets or brokers may offer stop orders with price protection or convert them to stop-limit orders, but the standard sell stop order does not limit how far the price can slip.
Worked example
In this example, the sell stop triggers at 48.00 but the actual fill is 47.85, a slippage of 0.15 per share. The final execution price is determined by the market after triggering, not by the stop price itself.
Common uses and variations
- Protective exit: placed below the purchase price to limit losses on a long position.
- Short entry: placed below the current price to open a short position when price breaks a support level.
- Trailing stop: a sell stop whose stop price is adjusted upward as the market price rises, locking in gains.
Rules on order types, triggering conditions and price protection vary by broker, exchange and regulator. Some markets may not accept stop orders at all, or may only accept them during specific sessions.
Often confused with
- stop loss
- A stop-loss is a general risk-management instruction that can be implemented with a sell stop order, but the term describes the purpose rather than the order type; the visible sign is that a stop-loss always refers to an existing position, while a sell stop order can also open a new short position.
- stop limit order
- A stop-limit order becomes a limit order after triggering, so it may not fill if the price moves past the limit, whereas a sell stop order becomes a market order and fills at the best available price; the visible sign is the presence of a limit price in addition to the stop price.
- stop order
- A stop order is the broader category that includes both buy stop and sell stop orders, while a sell stop order is specifically the sell-side version; the visible sign is the direction of the order relative to the current market price.