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Stop Order

Trading Term

Stop orders become market orders once the stop price is triggered. This order type may generate messages when the stop is triggered, and the order converts to a Market order.

A Stop order is an instruction to submit a buy or sell market order if and when the user-specified stop trigger price is attained or penetrated. A Stop order is not guaranteed a specific execution price and may execute significantly away from its stop price. A Sell Stop order is always placed below the current market price and is typically used to limit a loss or protect a profit on a long stock position. A Buy Stop order is always placed above the current market price. It is typically used to limit a loss or help protect a profit on a short sale.

If you are long on 100 shares of a stock at $50 and you want to protect against a sharp decline, you can place a Sell Stop Order at $45. If the stock price drops to $45 or below, your order will be triggered, and the stock will be sold at the best available price.

Order Adjustments: You can modify or cancel stop orders easily, just like other order types, directly through your IBKR platform.

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