stopgain

Stop gain is a conditional trading order used to lock in profits by exiting a position once the price reaches a specified level above the entry price. In practice, a stop gain for a long position sets a target price above the purchase price; when the market price reaches that level, the order is triggered and a sale is executed. The intent is to automate profit-taking without requiring the investor to monitor the position continually.

How the order is executed depends on the broker and the order type chosen. A triggered stop gain can be filled as a market order (stop-market), which prioritizes execution speed but may incur slippage, or as a limit order (stop-limit), which aims to control the price but may not fill if the market moves away from the limit price during the trigger.

For short positions, a parallel concept exists where profit is taken if the price falls to a target below the entry price, typically via a buy-to-cover order. In both cases, stop gain orders are a form of take-profit mechanism used to realize gains automatically rather than relying on manual exits.

Advantages of stop gain include systematic profit protection and reduced need for constant monitoring. Limitations include price gaps or rapid volatility that can cause the order to fill at a less favorable price or not at all if a stop-limit is used. The availability and specifics of stop gain orders vary by market and broker, and they are often grouped with take-profit or profit-taking order types.