Stop orders

Recently learn this new order...haha..kinda sad that only few brokerage offer this option.

Stop order allow traders to key in a price which he want to buy or sell. Isnt that same as a limit price?

Hmm..kinda off...the difference is this

If you key in a stop buy order at 1.00 and a limit price order at 1.00. If the price is to hit 1.00, both orders will get penetrated. But in the case, if the price is to gap when the market opens, the price hit 1.2, the limit order at 1.00 will not be filled but the stop buy order will be filled as the price penetrated 1.00 and get filled at the market price of 1.2 at that point of time.

Disadvanatage of stop order is that, there will be circumstances that your order may be filled at a higher buying price or cut loss at a lower selling price as there is no limits once the price penetrated further than expected or anticipated.

Thus there is another type of order known as Stop limit order, where one can determine the stop limit at the entry and exit point. But think this type of order isnt free. Haha...one will have to subscribe. Perhaps there are brokeage which offer free stop limit orders usage in their system...just im unaware of it.

Do spend time researching on different orders types in the trading platform given by your brokeage. They will definitely better better explaination than mine version. :)

Will correct and update on this post once i familarise on this order type.