An instruction to sell a stock automatically if its price falls to a certain level. Stop-loss orders are designed to limit losses by exiting a position when the stock drops. Once the stock hits the stop price, it becomes a market order and executes at whatever price is available.
You buy a stock at $100 and set a stop-loss order at $90. If the stock falls to $90, your shares automatically sell at the market price, which might be $89.50. This protects you from losing more than about $10 per share.
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