Quick Stop Question

L

learninglisted

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?

:confused:
 
Quote from learninglisted:

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?

:confused:
More...

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...

Don
 
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