Types of Brokerage Orders
A stop order teaches your broker to buy or sell once the stock hits a target price, called the stop price. The downside is that when the stop price is reached, your order becomes a market order, to be executed at the market price. A limit order instructs your broker to buy or sell a stock only at a specific price, called the limit price. A limit order doesn’t become a market order, so you won’t pay more or sell for less than you want. You might also give a stop-limit order, instructing your broker to buy or sell when the stock hits a stop price, but not to pay more or accept less than the limit price.