If it goes up immediately afterwards and your order never reached the top of the queue, you might miss out. For limit orders you must also specify a time frame that indicates how long you want the order to remain active. Stop Order A stop order can be used to establish a new position, limit a loss on an existing position, or protect a profit. A stop order specifies a price at which the order will be executed. This is better illustrated with an example.
Some bad news hits the market and everyone starts selling.
A stop order is designed to get you out of the market, or into the market quickly if the stock trades through a specific price. Above we have seen an example of a stop loss order, let's look at a stop entry order. Stop orders are also used to enter a position when certain conditions are met. You would like to buy it, but only if it actually does show some strength and begins to rise. There are two ways to use stop orders.