Example: You want to buy a stock, but only if its price begins to increase. You place an order for the stock with a stop threshold of 25 Swiss francs. If the price of the stock climbs to 25 Swiss francs or higher, the stop buy order becomes a regular market order – meaning the broker purchases the ordered stock at going market rates.
It is important to note that while the order is triggered as soon as the rate matches or exceeds the stop limit, the order is filled at the best available offer.
Example: You specify a stop limit of 25 francs. The price of the stock climbs to 25 francs which triggers a market order. By the time the broker fills half of the order, the rate has fallen to 23 francs. The outstanding shares are purchased for 23 francs per share.
See also: Stop loss order
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