Sell stop
Also called Sell stop order, Sell-stop, Stop sell order
A sell stop is a pending order to sell once price falls to a level you set below the current market price. Traders use it to join a move down after a break, or to close a long trade as a stop loss.
It fills as a market sell, so in a fast move you can get a worse price than your level. Put it above the price by mistake and the platform will reject it, or on some platforms fill it straight away as a sell at market. Size it without allowing for slippage and a gap can cost you more than you planned.
How each use works in practice:
- Breakout entry. You expect that a break below support will keep going, so you go short only if price proves it by falling there. You wait for the break instead of selling now because support often holds. If it holds, the order never fills and you stay out of a losing short.
- Stop loss on a buy. The stop loss on a long trade is itself a sell stop. It closes your buy if price drops to your exit level. To move your exit, you edit this existing order rather than place a new one. To exit early, you close the position at market. Deleting the stop loss does not close the trade. It leaves the buy open with no protection.
Where a sell stop sits compared with the price now
The level you choose is the trigger price. On most platforms the trigger is the bid (you sell at the bid, so the platform watches the bid, not the midpoint between bid and ask). A sudden widening of the spread can therefore push the bid down to your level and fill the order even if the mid price never reaches it.
Decision rule: before rollover or a news release, compare the distance from the bid to your level with the spread that pair usually shows. As a rule of thumb, not a measured figure, keep that distance at least two to three times the usual spread. If it is smaller, move your level further away or wait until the release has passed.
Sell stop, sell limit and sell stop limit compared
| Order | Placed | Fills when | Fill price |
|---|---|---|---|
| Sell stop | Below current price | Price falls to the level | Next available price, can be lower |
| Sell limit | Above current price | Price rises to the level | Your level or better |
| Sell stop limit | Stop below price, limit at or below the stop | Price falls to the stop, then a sell limit is placed | Not below the limit, or no fill at all |
Check your order window first: if it only accepts a limit above the stop, your platform uses the bounce version described next. On those platforms the order waits for a bounce after the trigger. This page uses the classic setup shown in the table and the drawing below: the limit sits at or below the stop, as the lowest price you accept.
Decision rule: if you expect the fall to continue through a level, use a sell stop. If you expect price to turn down from a level above, use a sell limit. A sell stop limit protects you from a bad fill, but in a fast drop it may never fill. That makes it a poor choice for a stop loss.
Worked example: shorting a break below support
The figures here are an illustrative example. EUR/USD trades near 1.0985 and keeps bouncing off support near 1.0960. You place a sell stop at 1.0950, a stop loss at 1.0990 and a take profit at 1.0870. Your size is 0.10 lots, which is 10,000 units.
In the chart below, price tests support several times and then drops through it. The candle that crosses 1.0950 is where your order fills.
Now work out what is at stake before you place the order. The steps below are easy to redo with your own numbers.
Now suppose news hits and price gaps from 1.0958 straight to 1.0935. Your order fills at 1.0935, not 1.0950, which adds 15 pips to your stop loss distance and takes 15 pips off your target. The chart below shows how the gap turns a planned 1:2 trade into roughly 1:1.2.
Setting a sell stop in your order window
On most trading platforms, open a new order and choose a pending order instead of an order that fills at the current price. Then choose the sell stop type. Your platform will ask for:
- Price: the trigger level below the current bid.
- Volume: your lot size.
- Stop loss and take profit: these attach to the position once it opens.
- Expiry: good until cancelled, or a set date and time.
Many platforms also let you drag a pending order line on the chart to move it. A waiting sell stop usually shows in a separate pending or working orders list, not with your open positions.
Checks before you place a sell stop
- The trigger is below the current bid.
- The level has a reason behind it, such as just beyond support, not on it.
- You know the stop loss distance from your trigger price, and the money at risk fits your plan.
- Redo the risk calc as if the order filled well below your trigger, as in the worked example's news gap from 1.0958 to 1.0935. If that loss is too big, cut the size.
- The expiry suits the idea. If your setup is only valid today, don't leave a good-until-cancelled order running for a week.
- You know how your account treats opposite positions if you already hold a buy on the same pair. If your account nets positions per pair, a filled sell stop reduces your buy. If it allows opposite positions, it opens a separate short alongside the buy.
FAQ
Does a sell stop cost anything while it waits?
With most brokers, no. Spread, commission and margin only apply once the order fills and becomes a position.
What happens to my sell stop over the weekend?
It stays in place but cannot fill while the market is closed. If Monday opens below your level, it fills at the first available price, which can be well below your trigger.
Can my sell stop fill if the price only touches my level for a second?
Yes. Any bid price at your level triggers the order, even if price bounces straight back. It then fills at the next available price.