A Stop Order, also called Stop-Market order is used to trigger a market sell when the market drops to your trigger (stop) price, or used to trigger a market buy if the market rises to your trigger (stop) price. This is often used as a stop loss order if the market is moving against an open margin position. Stop orders will fully execute as a market order once the trigger price is reached.
Example 1: If the current market price is 250, the trader in a long position might want to sell if the price reaches 245. A stop sell at 245 will be used in this case.
If shorting, a trader would place a stop buy above the current price. This would mean that if the market goes against their short (up) they can cut their losses by buying to close or reduce their short position.
Example 2: If the current market price is 250, the trader in a short position might want to buy if the price reaches 255. A stop buy at 255 will be used in this case.
There are two main types of Stop orders on MTBIT, Stop-Limit and Stop-Market.