What is a Stop Loss Order?

A Stop Loss Order is an instruction, valid for a pre-determined time period, that has two price points to sell a security if the asset price falls to or below a specified price.

The “Price From” is the price through which the stock needs to fall for an order to be triggered.
The “Price To” is the lowest price that will trigger an order.
The “Price To” must be lower than the “Price From” and must be between 1 – 10% of the “Price From” value.


If you purchase the stock at 90p and decide that you wish to limit your losses to 20%, you should place a Stop Loss Order with a “Price To” of 72p (20% down on your purchase price) and the “Price From” can be anything between 80p – 72.72p. These “Price From” prices give you a range of 1-10% back to your maximum loss.

If the price falls to between these prices, your order should be triggered. If it fell, maybe on market opening, following a stock market announcement, to 63p, the order would not trigger as the price is outside of the range. For this reason, you should always monitor your limit orders in case of extreme price movements.

- Submitted on 29th Feb 2020

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