Stop order & limit order....what's the difference?

[luvya]

Eduate me please.

 

[DaWhim]

did you ask Dr. Google?

 

[tami]

edumacate, you mean?

 

[luvya]

I did. Still too confused. An example to show the difference of the two would be great.

 

[kranky]

A stop order means that your order becomes active when a certain price is reached. Your order will be filled, but not necessarily at that exact price. (Also, a market order is an order to buy or sell at whatever the current market price is.)

A limit order means your order will be filled at a particular price only.

So if I own XYZ company and want to sell if the price goes to $50/share, I could put in a limit order for $50/share. But even if the price goes to $50, my order might not be filled because other people could be in line ahead of me.

If I own XYZ company and want to sell if the price ever gets to $50/share, I could put in a stop order. If the price gets to $50, my order becomes a market order. My order could be filled at a price somewhere above or below $50.