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What is a Stop Order?

A stop order is different from a limit order, or a market order. When an investor wants to buy or sell a stock once a specific price is reached (stop price), a stop order can be a useful option.  It is important to understand that the stop price serves as a trigger, which activates a market order. The market order is executed at the best price available.* A common use of stop orders is to help investors avoid potential losses in case the stock drops to an undesired price. 


*There is no guarantee that if a stop order is triggered, the investor will pay or receive the stop price.

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