Quick Stop Question

Discussion in 'Trading' started by learninglisted, Oct 19, 2003.

  1. I'm having a brain cramp here.

    Someone asked me this the other day and I couldn't remember the answer: Does the price of a stock have to actually have hit your price for the stop to be activated? I'm thinking no if it's a stop-market order, but I just want to be sure.

    For example, say you're long a stock at $10. You place a stop MARKET order at 9. The stock gets halted and opens up at 8. Would your stop be activated?

  2. The "stop" is a triggering device. If a stock hits your "trigger" price (or trades below it), then you have activated your "market order." That is how it works. If you have a "stop limit" order, then when the order is activated, there is a limit attaced to it. This can fail when the trade after the stop trigger is activated is beyond the price of your limit price.

    Hope this helps...

  3. Yes it would be activated if it was a sell stop market order.