Stop & Stop-Limit Orders

How stop orders trigger, why a stop becomes a market order, what stop-limit orders change, and what happens when a stock gaps past your stop.

An order that waits for a trigger

A stop order sits quietly until the stock trades at a price you choose, the stop price. Once that happens, it turns into an active order. Traders mostly use sell stops to limit losses on a position, which is why they are often called stop-loss orders. Buy stops are used to enter above a level, such as a breakout pivot, or to cover a short position.

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