Stop-Loss Order

An order placed with a broker to sell a security when it reaches a specified price, designed to limit an investor's loss on a position. Once the stop price is hit, the stop-loss becomes a market order and executes at the next available price. While stop-losses provide discipline and protect against catastrophic losses, they are not foolproof -- gaps and fast markets can result in execution well below the stop price, a phenomenon known as slippage.