Stop Limit, Loss Order Law and Legal Definition

A stop-limit order is an instruction by an investor to a broker to buy or sell at a specified price or better after a given stop price has been reached or passed.

A stop-loss order is an instruction by an investor to a broker to buy or sell when a certain price is reached; designed to limit an investor's loss on a security position. It is sometimes called a "stop market order." For example, setting a stop-loss order for 10% below the price you paid for the stock would limit your loss to 10%. Such an order is commonly used before an investor leaves for holidays or enters a situation in which he or she will be unable to watch their stocks for an extended period of time. The disadvantage is that the stop price could be activated by a short-term fluctuation in a stock's price.