sell at the best available price after the price goes below the stop price. A sell-stop price is always below the current market price. For example, if an investor holds a stock currently valued at $50 and is worried that the value may drop, he/she can place a sell-stop order at $40. If the share price drops to $40, the broker sells the stock at the next available price. This can limit the investor's losses or lock in some of the investor's profits (if the stop price is at or above the purchase price). Buy-stop order A buy-stop order is typically used to limit a loss (or to protect an existing profit) on a short sale. A buy-stop price is always above the current market price. For example, if an investor sells a stock short — hoping for the stock price to go down so they can return the borrowed shares at a lower price (i.e. covering) — the investor may use a buy-stop order to protect against losses if the price goes too high. It can also be used to advantage in a declining market when an investor decides to enter a long position at what he perceives to be prices close to the bottom after a market sell-off. Stop-limit order A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order. Once the stop price is reached, a stop-limit order becomes a limit order that will be executed at a specified price (or better). As with all limit orders, a stop-limit order doesn't get filled if the security's price never reaches the specified limit price. Trailing stop order A trailing stop order is entered with a stop parameter that creates a moving or trailing activation price, hence the name. This parameter is entered as a percentage change or actual specific amount of rise (or fall) in the security price. Trailing stop sell orders are used to maximize and protect profit as a stock's price rises and limit losses when its price falls. For example, a trader has bought stock ABC at $10.00 and immediately places a trailing stop sell order to sell ABC with a $1.00 trailing stop (10% of its current price). This sets the stop price to $9.00. After placing the order, ABC does not exceed $10.00 and falls to a low of