Setting a stop loss order on Robinhood

A stop loss order is an instruction to sell a stock automatically if its price drops to a level you choose. On Robinhood, you set this up through the same order screen where you place regular sell orders, by selecting "Stop Loss" as your order type instead of "Market" or "Limit." The order sits inactive until the stock hits your stop price — then Robinhood converts it to a market sell order and executes it at whatever price the stock is trading at that moment.

Stop loss orders do not may provide you will sell at your stop price. Once the stock drops to your stop price, Robinhood immediately tries to sell, but the actual sale price may be lower, especially in fast-moving markets or with stocks that have wide bid-ask spreads. You are paying for the automation, not for price protection.

Key Takeaways

  • Stop loss orders on Robinhood convert to market sell orders once the stock price touches your stop price, so the actual sale price may be lower than you set.
  • You place a stop loss order by opening the stock, tapping "Sell," selecting "Stop Loss" as the order type, and entering your stop price.
  • Stop loss orders remain active until the stock hits your stop price, you cancel them, or the market closes for the day (for day orders).
  • Robinhood charges no commission on stock trades, but your stop loss order will still execute at market price, which can slip during volatile trading.

How to place a stop loss order step by step

Open the stock you own in the Robinhood app. Tap the "Sell" button at the bottom of the screen. On the order screen, you will see order type options at the top — tap "Stop Loss" instead of "Market" or "Limit."

Enter the stop price — the price at which you want to sell. This should be lower than the current stock price. For example, if you own a stock trading at $50 and want to limit losses, you might set a stop price of $45. Once the stock drops to $45 or below, Robinhood will sell your shares at market price.

Review the number of shares you are selling, confirm the stop price is correct, and tap "Submit Order." The order is now active. You can see it in your "Orders" tab, where it will show as "Pending" until the stock hits your stop price.

When your stop loss order executes

Your stop loss order becomes active the moment you submit it and remains active until one of three things happens: the stock price touches or falls below your stop price, you cancel the order, or the market closes (if you set it as a day order, which is the default).

When the stock price hits your stop price, Robinhood automatically converts the order to a market sell order. This means it sells immediately at whatever price the stock is trading at that moment. In a normal market, this might be very close to your stop price. In a fast-moving or thinly traded stock, the price could be significantly lower by the time your order executes.

After your stop loss order executes, the cash from the sale appears in your Robinhood account and is available to trade or withdraw. You will see the executed order in your order history with the actual sale price.

Canceling or changing a stop loss order

You can cancel a stop loss order at any time before it executes. Open the stock, go to your "Orders" tab, find the pending stop loss order, and tap "Cancel." The order is immediately removed and your shares remain in your account.

Robinhood does not allow you to edit a stop loss order once it is placed. If you want to change your stop price, you must cancel the existing order and place a new one with the new stop price. This takes only a few seconds but means you have a brief window where you have no stop loss protection if you are changing the price downward.

Stop loss orders and market hours

By default, stop loss orders on Robinhood are day orders, meaning they expire at the end of the trading day (4 p.m. Eastern) if they have not executed. If the stock does not hit your stop price by market close, the order cancels automatically and your shares remain in your account.

Robinhood does not offer good-till-canceled (GTC) stop loss orders, which would remain active across multiple trading days. If you want ongoing stop loss protection, you must place a new day order each morning or accept that your protection ends at market close each day.

Stop loss orders do not execute during after-hours trading (4 p.m. to 8 p.m. Eastern, or 8 a.m. to 9:30 a.m. for pre-market). If a stock drops sharply after hours, your stop loss order will not trigger until the regular market opens the next day.

Why stop loss orders can fail to protect you

The biggest risk with stop loss orders is slippage — the gap between your stop price and the actual sale price. In a stock that trades millions of shares per day, slippage is usually small. In a thinly traded stock or during a market crash, slippage can be severe. A stock might gap down past your stop price overnight, and when the market opens, Robinhood sells at whatever the opening price is, which could be well below your stop.

Stop loss orders also do not protect you against the stock being halted or delisted. If a company files for bankruptcy or the SEC halts trading, your stop loss order becomes worthless because there is no market to sell into.

For these reasons, stop loss orders are a tool for managing risk, not a may provide. They work best on liquid stocks with tight spreads and should not be your only risk management strategy.

Stop loss versus stop limit orders

Robinhood offers both stop loss and stop limit orders. A stop loss order converts to a market order and sells at any price once your stop price is hit. A stop limit order converts to a limit order, meaning it will only sell at your limit price or better — but it may not sell at all if the stock falls below your limit price without hitting it.

Stop loss is simpler and guarantees execution (though not at your stop price). Stop limit gives you price control but risks leaving you holding shares if the stock falls too fast. Most people use stop loss for downside protection and stop limit when they want to sell only within a specific price range.

Frequently Asked Questions

Can I set a stop loss order on a stock I don't own yet?

No. You can only place a stop loss order on shares you already own in your Robinhood account. If you want to set a stop loss on a stock you plan to buy, you must purchase the shares first, then place the stop loss order.

What happens to my stop loss order if the market gaps down overnight?

Your stop loss order will not execute until the market opens. If the stock opens below your stop price, Robinhood will sell at the opening price, which may be significantly lower than your stop price. This is called a gap down, and stop loss orders cannot prevent it.

Does Robinhood charge a fee for stop loss orders?

No. Robinhood charges no commission on stock trades, including stop loss orders. You pay nothing to place or execute a stop loss order, though you do pay the bid-ask spread (the difference between what buyers and sellers are willing to pay) when the order executes.

Can I place a stop loss order on fractional shares?

Yes. If you own fractional shares on Robinhood, you can place a stop loss order on them just as you would on whole shares. The order will sell all or part of your position depending on how many fractional shares you own.

What if my stop loss order executes but I want to buy the stock back immediately?

You can place a new buy order right away. The cash from your stop loss sale is available to trade immediately. Keep in mind that if you sell and buy back the same stock within five trading days, you may trigger a pattern day trader flag if your account is under $25,000.