SEC Educates Investors On "Stop," "Stop-Limit" And "Trailing Stop" Orders

The SEC Office of Investor Education and Advocacy ("OIEA") described the differences between "stop," "stop-limit" and "trailing stop" orders. In an educational bulletin on buying and selling stops, the OIEA stated:

• Stop Orders, also known as "stop-loss" orders, can be used to buy or sell a stock when the price reaches a certain point. Investors use buy or sell stops to try to limit losses or protect profits. The OIEA warned investors to be aware that execution price and stop price will not necessarily be the same, as stop orders merely serve as triggers for the stock to become a market order. Thus, market fluctuations can cause the execution price to deviate from the stop order price.