Glossary

Stop-loss order: meaning, example and why it matters

An instruction to exit a position if the price reaches a level you set in advance, meant to limit a loss. In fast or gapping markets it can execute at a worse price than the trigger.

Worked example

You hold shares bought at ₹100 and place a stop-loss at ₹92. If the price trades down to ₹92 the order is triggered and sells at the next available price, which in a fast fall can be ₹90 or lower, so the loss can exceed the planned ₹8 a share.

Illustrative numbers for explanation only. They are not market data, a forecast or a suggestion.

Why it matters

It is meant to limit a loss, but it is not a guarantee of the exit price.

Related terms

Limit orderMarket orderPosition sizing

See it in practice

Position size calculatorWhat is a stop-loss?

Frequently asked questions

Does a stop-loss guarantee my exit price?

No. Once triggered it becomes an order, and in a fast or gapping market it can fill below the trigger.

Is this page investment advice?

No. Stop-loss order is explained in general terms with illustrative numbers. Market Dekho is not a SEBI-registered Research Analyst or Investment Adviser.

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Educational content, not investment advice. Market Dekho is not a SEBI-registered Research Analyst or Investment Adviser. Spotted a mistake? Email marketdekho01@gmail.com.