Stop market order

A trigger order that becomes a market order once the price reaches a level you set. It prioritises getting filled over getting a specific price, which is why it is the common choice for a stop-loss.

Definition

A stop market order does nothing until the price touches your trigger level. At that moment it converts into a market order and executes against whatever liquidity is available.

Why the fill price is not the trigger price

The trigger only decides when the order wakes up. What it fills at is a separate question, answered by the order book at that instant. The gap between the two is slippage, and it widens exactly when you least want it to: in a fast move, on a thin book, or at hours when market makers pull back.

That gap is not a malfunction. It is the price of the guarantee that the order will actually go through.

Stop market versus stop limit

The two orders differ in one decision. A stop market accepts any price in exchange for near-certain execution. A stop limit sets a floor or ceiling on the fill price and accepts that the order may not execute at all.

For a protective stop the question is which outcome you can live with: an exit worse than planned, or no exit and a position that keeps running against you.

What to check before you rely on one

Whether the exchange triggers on the mark price or the last traded price, because a briefly spiking last price can fire your stop when the mark price never moved that far. Whether the order is flagged reduce-only, so it can only shrink your position and never accidentally open a new one in the opposite direction. And how much depth sits between your trigger and the price you would still find acceptable.

Where you will run into it

Stop market is the standard order type behind the stop-loss field on perpetual DEXs, and it is grouped with stop limit and take-profit under trigger orders in most interfaces.