Can a stop-loss order fail to execute?

Yes, and this is one of the more important things to understand about stop-loss orders: triggering and executing are two different steps. Once the trigger price is hit, an SL-M order almost always executes since it becomes a market order, but an SL-L order can trigger and still fail to execute if the market moves past your specified limit price before a matching counterparty is found, especially during a sharp gap or a liquidity crunch. In extremely volatile conditions, like a stock hitting its lower circuit with no buyers at any price, even an SL-M order can struggle to find a fill, since a market order still needs someone on the other side to match with. This is exactly why stop-loss orders reduce risk but don’t eliminate it entirely. You choose SL-M over SL-L for positions in volatile or lower-liquidity stocks where you’d rather guarantee an exit than protect a specific price.