Example: The price of a commodity has been falling, but you believe it will reverse and begin to go up. You want to buy the commodity at the best available offer if the price per unit climbs to 100 Swiss francs or higher – just above its current low of 99 francs per unit. Once you have bought the commodity, you want to hold it until you can sell it for 110 francs per unit.
By using a stop market + limit order, you can set both a buy stop threshold (in this case 100 francs) for the buy order and a limit threshold (in this case 110 francs) for the sell order right from the start before you even invest in the assets, without having to place separate buy stop market and sell limit orders.
Note: A stop market order triggers a market order when the buy stop threshold is reached. The market order instructs the broker to buy (or sell) assets at the best available bid and offer, which may be lower (or higher) than the stop threshold. In the example above, the price which the broker pays for the commodity may be higher or lower than 100 francs if the price of the commodity fluctuates from the 100-franc mark before the broker can complete the purchase.