A stoploss market order, known as SLM, is an instruction to buy or sell a stock at the current market price after it hits a specific trigger price that was decided beforehand. Traders use this kind of order to reduce losses or safeguard profits if the market takes a turn for the worse. In essence, it aids in controlling risk by closing out a trade when there are unfavorable price changes.

The stoploss market order only goes through on the exchange when the trader’s designated trigger price is hit. Once this happens, the order turns into a standard market order and is carried out at the best price that’s available. This process ensures that the position is closed quickly, which helps to lessen possible losses.

Stoploss market orders differ from stoploss limit orders because the latter has an execution price limit. While stoploss market orders guarantee that the trade will be executed once the trigger price is reached, stoploss limit orders might not be fulfilled if the market price surpasses the defined limit. This difference is important for traders to grasp when selecting the right type of order to manage their risk effectively.