New Conditional Order Type Tutorial 3: Stop Order

A stop order is a market order to be placed to sell the stock once the nominal price drops to a specific trigger price, known as “stop price”. This helps limit potential losses by automatically closing a position when the market moves unfavorably against the member’s interests. Stop orders allow members to manage risk more effectively by setting predefined exit points, without having to constantly monitor the market. Below is a possible scenario to consider using the stop order.

Scenario : 

Suppose you want to automate the sale of 100 shares of a stock if the nominal price drops from $50 to $45 to protect yourself against significant downside risk.Here’s how you can consider to use a Stop Order in this scenario:

Set “Trigger Price” at $45 to sell 100 “ Quantity” at market price when the nominal price hit $45

A sell market order will be automatically placed if the nominal price drops to $45 or below. This allows you to protect yourself against significant downside risk. 

Notes: 

1. A stop order is applicable to sell order only.
2. A market stop order does not guarantee execution at a specific price. They may fill at a price far better or worse than the current price. 

More detailed information is available in the FAQ “What is a conditional order” section for your reference.

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