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Background to the Term “On Stop”

 

 

 

We have had a number of queries regarding the term “On Stop”. ┬áThis is the term that is used internationally for placing an order where you want a certain price to be reached, prior to your entering the position for a continuation of the price direction.

 

Research indicates that this term comes from the days when the brokers used Ticker Tape machines and the terminology was the same as that used by telegraph operators, that is punctuation was a word not a symbol and many abbreviations were used to reduce the amount of verbiage in the traffic.

 

The word to end a sentence was “STOP”, then commence a new sentence. We believe the term “On Stop” came about in the following fashion. Example – someone placing an order for BHP Billiton to buy when the price traded at $45.55 and not before then Westpac Bank at $98.75 would have appeared on the ticker tape as – “Buy 3000 BHP 45.55 on STOP Buy 2500 WBC 98.75 on STOP”

 

The term “on” means that when the initial price is traded, buy at that price and above. These orders now mean Buy 3000 BHP at $45.55 and above and Buy 2500 Westpac at $98.75 and above – the term “On” came to signify the “and above” and Stop was the end of the sentence. hence the term “On Stop”. We believe this is the correct history behind the term.