Used when you want to buy a stock if it rises to a certain level - a classic breakout entry strategy. Your stop price is set above the current price.
Example:
TSLA is falling and currently at $200. You set a sell with stop price $210 (Trigger level) and Limit price $215 (Max you'll pay)
- TSLA trades below $210 - your order sits dormant, nothing happens
- A trade prints at $210 or above - the stop price is elected and your order converts to a limit buy at $215
- The limit order fills at $215 or lower - or stays open if the market moves away before a seller is found at that price
If the price reverses
If TSLA triggers at $210 then drops back to $195, your order does not cancel automatically. It remains a live limit buy at $215. If you no longer want the position, you must cancel it manually - otherwise it could fill days later if the stock recovers.