Stop order | Robinhood

Stop order

A stop order is an order to buy or sell a stock once the stock reaches a specific price, known as the stop price.

When the stock hits your stop price, the stop order becomes a market order and is executed at the best price currently available. Stop orders are used to trigger a purchase if the stock price hits or goes above the stop price. They’re also used to trigger a sell if the stock price hits or drops below the stop price.

Keep in mind

Stop orders created incorrectly or at a price that can’t be executed may be rejected.

Buy stop order

With a buy stop order, you can set a stop price above the current price of the stock. If the stock rises to your stop price, your buy stop order becomes a buy market order.

Example

MEOW is currently trading at $6 per share. You want to wait to purchase MEOW until it reaches $8 because you think it’ll rise much higher, but only after it reaches $8, so you set your stop price to $8.

  • If MEOW rises to $8 or higher, your buy stop order becomes a buy market order. Then MEOW is purchased at the best price currently available.
  • If MEOW stays below $8, a market order isn’t triggered, and no shares are purchased.
Sell stop order

With a sell stop order, you can set a stop price below the current price of the stock. If the stock falls to your stop price, your sell stop order becomes a sell market order.

Example

You purchased MEOW for $10 a few months ago. It’s currently trading at $20 per share ($10 unrealized profit). Your goal is to make at least $5 per share if the price were to drop. So you create a sell stop order at $16.50. If MEOW reverses itself and starts to drop below the stop price of $16.50 it becomes a sell market order.

  • If MEOW falls to $16.50 or lower, your sell stop order becomes a sell market order. Then MEOW is sold at the best price currently available.
  • If MEOW stays above $16.50, a market order isn’t triggered, and you keep your shares.
Over-reserving buying power

To protect your account against overspending, we’ll over-reserve your buying power for stop buy orders and trailing stop buy orders.

  • For Good-For-Day orders that you enter during market hours, we’ll reserve an additional 5% of buying power.
  • For other orders, we’ll reserve an additional 10% of buying power.

Keep in mind, these percentages might change in response to extreme volatility.

Disclosures

The examples included in this article are for illustrative purposes only. In general, understanding order types can help you manage risk and execution speed. However, you can never eliminate market and investment risks entirely. It’s usually best to choose an order type based on your investment goals and objectives.

All investments involve risks, including the loss of principal. Investors should consider their investment objectives and risks carefully before investing.

Robinhood U.K. Ltd (Robinhood UK) is a company registered in England and Wales (09908051) and is authorised and regulated by the Financial Conduct Authority (FRN: 823590). Robinhood UK onboards UK customers and has the lead customer relationship with UK customers in relation to their use of the Robinhood UK app and website. Robinhood UK introduces UK customers to Robinhood Securities, LLC for order routing, execution, clearing, settlement, arranging custody services and margin lending to eligible UK customers with margin accounts. Robinhood Securities, LLC is regulated in the U.S. by the SEC and FINRA. Robinhood UK and Robinhood Securities, LLC are subsidiaries of Robinhood Markets, Inc.

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All investing involves risk and a loss of principal is possible.

Robinhood U.K. Ltd (Robinhood UK) is authorised and regulated by the Financial Conduct Authority (FRN: 823590). Robinhood UK onboards UK customers and has the lead customer relationship with UK customers in relation to their use of the Robinhood UK app and website. Robinhood UK introduces UK customers to Robinhood Securities, LLC for order routing, execution, clearing, settlement, arranging custody services and margin lending to eligible UK customers with margin accounts. Robinhood Securities, LLC is regulated in the U.S. by the SEC and FINRA. Robinhood UK and Robinhood Securities, LLC are subsidiaries of Robinhood Markets, Inc.

Robinhood U.K. Ltd is a private limited company registered in England and Wales (09908051).

Robinhood does not provide investment advice. Individual investors should make their own decisions.

Commission-free trading of stocks refers to $0 commissions for Robinhood self-directed individual brokerage accounts that trade U.S. listed securities and ADRs. Keep in mind, other costs such as regulatory fees may apply to your brokerage account. Please see Robinhood UK’s Fee Schedule to learn more.

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All investing involves risk and a loss of principal is possible.

Robinhood U.K. Ltd (Robinhood UK) is authorised and regulated by the Financial Conduct Authority (FRN: 823590). Robinhood UK onboards UK customers and has the lead customer relationship with UK customers in relation to their use of the Robinhood UK app and website. Robinhood UK introduces UK customers to Robinhood Securities, LLC for order routing, execution, clearing, settlement, arranging custody services and margin lending to eligible UK customers with margin accounts. Robinhood Securities, LLC is regulated in the U.S. by the SEC and FINRA. Robinhood UK and Robinhood Securities, LLC are subsidiaries of Robinhood Markets, Inc.

Robinhood U.K. Ltd is a private limited company registered in England and Wales (09908051).

Robinhood does not provide investment advice. Individual investors should make their own decisions.

Commission-free trading of stocks refers to $0 commissions for Robinhood self-directed individual brokerage accounts that trade U.S. listed securities and ADRs. Keep in mind, other costs such as regulatory fees may apply to your brokerage account. Please see Robinhood UK’s Fee Schedule to learn more.

UK Privacy policy

© 2024 Robinhood. All rights reserved.