What's a Stop Limit Order?

Believe it or not, I looked ALL over and couldn't find an explanation I understood. So finally, I called the broker and asked. Turns out, it's pretty simple.

A STOP order is like this. Say you're holding a stock and it's going down. At THIS price, sell the stock at market. That's a stop order. The stop price is the price at which the system places an order to sell your stock at market, i.e. whatever you can get for it.

A STOP-LIMIT order is only slightly different. At THIS (stop) price, sell the stock at THAT (limit) price. So instead of selling your stock at market for whatever you can get for it, you try to sell the stock for a specific price. And if the stock you're holding is in freefall, you hope to hell that you can actually sell it for that price. Otherwise, you might be left holding it and unable to sell.