Stop-Limit Order.

In plain English

A stop-limit order combines two prices: a stop price that activates the order, and a limit price that sets the worst price you will accept once it activates. When the stock hits the stop price, the order becomes a limit order rather than a market order. This gives you protection from selling far below your target, but it adds a risk: if the price blows past your limit, the order may not fill at all and you stay in the position. It is the tradeoff between price certainty and the guarantee of getting out.

01Why it matters

A stop-limit stops you from dumping a stock at a fire-sale price, but in a fast crash it can leave you holding a falling stock because the sale never executed.

02The math, step by step

You own a stock at $50. You set a stop price of $45 and a limit of $44. If it falls to $45, the order activates, but it will only sell at $44 or higher. If the stock gaps straight from $46 to $43, it may not sell at all, leaving you still holding it.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT