Stop-Limit Order
A stop-limit order becomes a limit order once a set stop price is reached, so it trades only at the limit price or better.
A stop-limit order combines two prices: a stop price, which activates the order, and a limit price, which sets the worst price you are willing to accept. When the stock reaches the stop price, a limit order is placed in the market instead of a market order.
This gives you more price control than a plain stop-loss order. The downside is that the order may not be filled at all. If the stock falls quickly through both your stop and your limit price, your shares are not sold and you may face a larger loss than planned.
Stop-limit orders can be used both for selling to limit losses and for buying, for example when a trader wants to enter a position only after a stock breaks above a certain level but does not want to pay more than a set amount.
Example: you own a stock trading at $60 and set a sell stop-limit order with a stop of $55 and a limit of $54. If the price drops to $55, a limit order to sell at $54 or higher is placed. If the stock gaps down to $50, the order will not be executed until the price recovers to $54.