What is a stop-limit order?

Stop-limit orders are a type of stop-loss, but at the stop price, the order becomes a limit order—only executing at the limit price or better. There are two types of stop-loss orders: one to protect long positions (sell-stop order), and one to limit losses on short positions (buy-stop order).

Is a stop-loss order a market order?

Since a stop-loss order becomes a market order once the stop-loss level has been breached, it may get executed at a price significantly away from the stop-loss price. With a stop-limit order, the risk is that the trade may not get executed at the specified limit price.

What is the difference between a stop price and a limit price?

The stop price dictates the price whether the order is triggered, then the limit price dictates the price at which the order is filled. Stop-limit orders offer risk management, automation, and flexibility in trading, though they do not protect against price gaps and are slightly more complex to set.

How to buy AAPL with a stop-limit order?

The investor has put in a stop-limit order to buy with the stop price at $160 and the limit price at $165. If the price of AAPL moves above the $160 stop price, then the order is activated and turns into a limit order. As long as the order can be filled under $165, which is the limit price, the trade will be filled.