Definition
A stop order is a conditional trading instruction. A plain stop often becomes a market order when triggered, while a stop-limit becomes a limit order. Platforms may use different labels, so the trigger and the resulting order type must both be understood. Stops can support exits or entries; they are not exclusively loss-control tools.
How It Works
For a hypothetical sell stop at 90 USDT, the system monitors the selected reference price and activates the instruction when its trigger rule is satisfied. A market stop then seeks available buyers. A stop-limit instead submits a specified limit price, which may differ from the trigger price. The relevant reference might be last traded, mark, or index price where supported.
Key Considerations
The trigger is not a guaranteed execution price. A fast fall can cause a market stop to fill below the trigger; a limit stop may remain unfilled. Available balance, platform protections, and outages can also affect execution. On leveraged positions, a stop based on a different price reference may not activate before liquidation.