Understanding Stop and Stop-Limit Orders

What is the primary function of a sell stop order?

• To guarantee a sale at a specific price

• To trigger a market sell order when the stock falls to a certain price

• To sell shares at a specific price or higher

• To buy shares at a higher price

How does a stop-limit order differ from a stop order?

• It cancels the trade if the price falls too quickly

• It guarantees the trade will execute at the next available price

• It allows setting a limit price for the minimum acceptable sale price

• It automatically buys shares when the price rises

In the example provided, what was the consequence of setting a stop order without a limit price?

• The shares were not sold at all

• The shares were sold at the anticipated price

• The shares were sold at a much lower price than expected

• The shares were bought back at a higher price

When is it advisable to use a stop order?

• When you are more concerned with exiting the trade than the price

• When you want to buy shares at a lower price

• When you want to ensure the trade executes at a specific price

• When you want to hold shares regardless of price

What is a potential risk of using a stop-limit order?

• The trade will automatically cancel if the price rises

• The trade will execute at the next available price

• The trade will always execute at a loss

• The trade might not execute if the price doesn't reach the limit