Stop Loss

An order that automatically sells when a price drops to a set level, capping losses.

A stop loss is a risk management tool that automatically exits a position when it reaches a predefined loss threshold. When the stop price is hit, it typically triggers a market order. In volatile markets, the actual fill price can be worse than the stop price, especially if the market gaps down.

A stop loss at $90 automatically sold his shares when the price fell, capping the loss.