They are orders which remain inactive until the last trade for that claim drops below the stop price (for a sell order) or rises above the stop price (for a buy order). A stop limit order becomes a regular limit order when the stop price is hit. A stop order becomes a regular market order when the stop price is hit.
They are typically used to limit your risk by bailing out of your holdings when the market trend goes against you. Beware, though, that if the size of a stop order is large relative to the size of other trader's orders, the stop order will cause the price to move even further against you.
Edit this entry / Log info / Last changed on Thu Dec 23 14:02:01 1999 by Peter McCluskey